Key Learnings from Humana's 2025 Investor Day

Humana’s Investor Day (links: transcript, slides) this week provided a fascinating lens into how Humana views the future of its business and also the outlook for Medicare Advantage more broadly, charting out the path from today’s performance to what the business will look like in 2028. Even just the decision to focus so much of the presentation on what 2028 will look like I think says a lot about how Humana views the trajectory moving forward from here — 2026 and 2027 will clearly be recovery years for the organization as it manages through the Stars performance issue before the business stabilizes in 2028.

The slide below highlights Humana’s expected earnings trajectory over the next few years, noting how the business would be growing steadily each year if not for the issue presented by Stars-related payments. Recall that back in October 2024, Humana filed an 8-K disclosing its members in 4 Star plans dropped from 94% in 2024 to only 25% in 2025. Humana expects this state to persist for an additional year, meaning that it will receive lower quality bonus payments in 2026 and 2027 (which occur a year after the performance year — i.e. the decline in 2025 Stars performance impacts Humana’s payments in 2026). As you can see in the chart below, this causes a huge drag on earnings for Humana during those two years:

• Side note. I’ll note my one main quibble with Humana’s investor day here. The slides are atrocious at labeling the y-axis on charts. I get it in some situations, but this was literally 126 slides with more charts than I care to count. Not one that I can see has labels on the y-axis. Not one!

Humana doesn’t share how many members it eventually expects to have in 4 Star plans as the business normalizes in 2028, but it does note that it expects to be a top quartile plan, and that it will outperform its peer set of other large MA organizations.

My overall takeaway from the session:

Setting aside my gripe about y-axes for a second, it’s a reasonable narrative that navigates a tough overall investor story over the next few years with focus and clarity.

Humana expects EPS to decline in 2026, before returning to 2025 levels in 2027, and then starting to see growth again in 2028. The fact that the business would be steadily growing without the Stars challenge highlights just how big of an issue that is for the business. Yet despite all that, Humana’s stock is up almost 6% so far this week, indicating the general sense that this is the right set of activities to prioritize in returning the business back to a solid growth path.

That said, I think the session it highlights two core challenges for the business:

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