# Humana Inc. (HUM) — InvestMoat Analysis

_Last analyzed: October 10, 2026_
_Asset class: equity · Canonical page: https://investmoat.com/stocks/hum_

## Scores

| Dimension | Score (0–100) |
| --- | --- |
| Moat durability | 65 |
| Growth trajectory | 58 |
| Valuation | 64 |
| **Composite** | **60** |

Scores are computed deterministically from this asset’s data by the InvestMoat formula (see https://investmoat.com/llms.txt for methodology). Scores are not directly comparable across asset classes.

## Key stats

- **Ticker:** HUM
- **Market Cap:** ~$52B

## Moat

Humana is the most Medicare-concentrated of the large insurers: about 6.45M individual Medicare Advantage members and the CenterWell primary-care, pharmacy and home-health businesses built around seniors. Its position rests on scale and know-how in one program, not on a structural lock, which is why a single year's star ratings can move its earnings by billions.

### The Medicare Specialist

Humana has bet the company on **one government program and the care model around it**. That focus is a real competence, but every pillar it rests on is one a large peer also holds:

- **Medicare Advantage Scale:** With about 6.45M individual MA members at June 30, 2026, Humana is the second-largest MA insurer behind UnitedHealth. Scale spreads the fixed cost of star-ratings operations, risk adjustment and senior-focused marketing, and it gives Humana negotiating weight with providers in its core Southeast and Midwest markets.
- **CenterWell: Owning the Senior Care Model:** CenterWell runs senior-focused primary care clinics, a mail-order pharmacy and home health. Q2 2026 segment revenue was $6.79B, up from $5.54B a year earlier, and Senior Primary Care patients grew 27% in the first half. Owning the clinic lets Humana manage the cost of its sickest members directly, the closest thing it has to UnitedHealth's Optum.
- **Star Ratings: Payment, Not Moat:** Humana's share of MA members in 4+ star plans went from 94% (2024 ratings) to 25% (2025) to about 20% (2026) and back to 95% (2027). The 2025 drop turned on three test calls to its call centre that CMS rated as failures, and courts upheld CMS twice. A score that can lose billions on three phone calls is a yearly payment input, not a durable advantage, and the file rates it that way.

**Moat verdict:** Humana's moat is focus, not a structural lock: every pillar it holds is held by at least one larger peer, so nothing scores strong. AI helps its risk-adjustment and care-management operations, but the swing factor in its earnings is CMS policy and a yearly star rating, not AI disruption.

### Top competitors

- **[UnitedHealth Group (UNH)](https://investmoat.com/stocks/unh):** Largest Medicare Advantage insurer.
- **[CVS Health (CVS)](https://investmoat.com/stocks/cvs):** Aetna Medicare Advantage plans.
- **[Elevance Health (ELV)](https://investmoat.com/stocks/elv):** Blue Cross Medicare Advantage plans.

## Growth

Q2 2026 (reported July 29, 2026) revenue was $40.87B, up about 26% from $32.39B, driven by individual Medicare Advantage membership of 6.45M, up about 23% YoY. Adjusted EPS was $7.61 versus $6.27. The Insurance segment benefit ratio was 91.2%, in line with guidance. FY2026 adjusted EPS guidance was held at at least $9.00, down from $17.14 in 2025, because the 2025 star ratings collapse cut bonus-year 2026 quality bonus payments; GAAP guidance was cut to at least $6.52. CenterWell revenue grew to $6.79B from $5.54B. The 2027 star ratings (95% of members in 4+ star plans) restore bonus payments from 2028, the year management targets a return to a stable margin.

- **Revenue CAGR estimate:** 5-9%
- **Primary type:** market share
- **Margin trend:** stable
- **Key risk (high):** If the 2028 star ratings (released October 2027) fall back below 50% of members in 4+ star plans, or CMS cuts MA benchmarks or risk-adjustment coding again for 2028, the bonus recovery the 2027 ratings bought disappears before it is paid and EPS stays near the 2026 trough.
- **Drivers:**
  - Individual Medicare Advantage — 6.45M members at June 30, 2026, +23% YoY; FY2026 growth guide about 25%; 2027 benefits adjusted to protect margin (stable)
  - CenterWell (primary care, pharmacy, home) — Q2 2026 segment revenue $6.79B vs $5.54B (+23%); Senior Primary Care patients +27% year to date (stable)
- **Score derivation:** Base 67.5 (5-9% CAGR, midpoint 7%) + 0 trajectory (individual MA and CenterWell both held stable: no prior-period CenterWell rate is on file to show acceleration) + 0 margin (2026 compression from the star ratings headwind is already in the trough EPS base; the 2027 ratings restore bonuses from 2028, but no benefit-ratio improvement has been reported yet, so the direction is held stable rather than credited before it shows up) - 10 high risk (Humana is the most MA-concentrated large insurer, so MA rate, risk-adjustment and star-ratings policy risk is graded one step above Elevance under G4) = about 58.

## Valuation

At $431.87 (October 9, 2026 close, after an 11.6% jump on the 2027 star ratings) HUM sits a little above the $420 base. That is about 48× the trough FY2026 adjusted EPS guide of at least $9.00, so the stock is priced on 2028: the 2027 ratings restore quality bonus payments that TD Cowen puts at $3B or more of extra 2028 revenue (as reported by Healthcare Dive). The base is about 17.5× roughly $24 of 2028 EPS, an inferred figure (2025's $17.14 was earned on 94% of members in 4-star plans and about 5.2M MA members; 2028 adds the 2026 membership cohort at the 3% margin management is bidding for), not company guidance. 17.5× sits above Elevance's roughly 15× and CVS's 12× because Humana's EPS is coming off a trough with more recovery left in it, and below UnitedHealth's base. The Street mean is about $453. The score is the formula at $431.87 on a $300 / $420 / $620 ladder.

| Multiple | Value | Note |
| --- | --- | --- |
| P/E (FY2026 adj. guide) | ~48× | At least $9.00; the bonus-year 2026 trough |
| P/E (2028 recovery EPS ~$24) | ~18× | Inferred recovery case with bonuses restored, not company guidance; the base uses about 17.5× |
| Price / Sales (TTM) | ~0.36× | TTM revenue about $146B |
| Dividend yield | ~0.8% | $3.54 annual dividend |

HUM is priced on 2028, not 2026. The trough multiple is meaningless, and the stock trades on whether the 2027 star ratings hold long enough to be paid and whether 2027 benefit cuts keep the membership it added in 2026. A repeat of the 2025 collapse in the October 2027 ratings would take the recovery case off the table. _(as of October 2026)_

## Price scenarios

### Bear — $300

The 2027 star ratings recovery is real but cost trend and the 2027 benefit cuts eat it: membership shrinks, 2027 EPS stays near the trough and the market stops paying for a 2028 recovery.

- The 2028 star ratings released in October 2027 fall back below 50% of members in 4+ star plans, cutting 2029 bonus payments before the 2028 recovery is fully priced
- MA medical cost trend runs above the 2027 bid, keeping the Insurance segment benefit ratio near 92% or higher
- 2027 benefit cuts drive members out during the October to December 2026 enrollment window, reversing much of the 2026 membership gain

### Base — $420

The 2027 ratings restore quality bonus payments in 2028, Humana reaches its margin goal of at least 3% on schedule, and the stock trades at about 17.5× roughly $24 of 2028 EPS.

- Quality bonus payments return in 2028 on 95% of members in 4+ star plans, adding billions of revenue as TD Cowen estimates
- Individual MA membership holds roughly flat to modestly up through 2027 despite benefit adjustments
- CenterWell keeps growing revenue in the high teens and expands its share of segment income

### Bull — $620

Humana keeps 4+ star status for most members in the 2028 ratings too, proving the recovery is operational rather than a one-year swing, and earnings return toward the high-$20s.

- The 2028 star ratings keep 80% or more of members in 4+ star plans, giving two bonus years in a row
- 2028 adjusted EPS reaches the high-$20s as bonuses and the 2026 membership cohort mature together
- CenterWell primary care proves it lowers medical cost for Humana members, supporting a premium multiple

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