It's been a rough week for Humana, the health insurer. Their stock has taken a big hit, dropping 23% since Monday – that’s the worst weekly fall since 2020 and the sharpest two-day drop in 15 years! The cause? Medicare is downgrading some of Humana's key health insurance plans, which could hurt their revenue and customer base.
On Tuesday, news started spreading about the downgrades. Humana confirmed this on Wednesday, and suddenly, their stock took a 24% dive in just five minutes! This drop makes it one of the worst two-day performances since the financial crisis of 2009. Now, only 25% of Humana's customers will have high-rated plans, down from an impressive 94%.
Medicare ratings are really important for insurers like Humana. They get extra money from the government for higher ratings. Lower ratings can scare away customers, so these changes are a big deal. Analysts at UBS called it the "worse case scenario" for star ratings. Humana is working hard to appeal and regain their ratings, but Bank of America analysts warn that recovery might take longer than expected.
The upcoming elections could also make things tougher for Humana if Democrats win. This could put more pressure on Medicare Advantage plans, making it harder for Humana to bounce back quickly. Analysts think there's a risk Humana might lose some market share to competitors like UNH. It’s a challenging time for the company!
