Core Viewpoint - Humana Inc. (HUM) is at a critical juncture as rising medical costs and Medicare Advantage (MA) challenges have impacted investor sentiment, raising the question of whether the worst is already priced in [1] Performance Summary - Over the past year, HUM shares have increased by 1.8%, outperforming the broader industry which saw a decline of 28.3%, and also faring better than peers like UnitedHealth Group (UNH) and Centene Corporation (CNC), which fell by 35% and 32.6% respectively [2][8] - Despite ongoing volatility, the relative strength of HUM suggests that investors are not ready to abandon the stock [2] Near-Term Pressures - Humana is experiencing pressure from elevated medical costs, particularly in its Medicare Advantage segment, with higher utilization trends and inpatient admissions affecting its medical care ratio [6][8] - Regulatory uncertainty regarding MA reimbursement rates continues to be a concern, limiting potential upside in the near term [6] Long-Term Tailwinds - Humana's long-term investment case is supported by its scale, the aging U.S. population, and initiatives focused on value-based care [9] - The company remains a leading Medicare Advantage provider with strong brand recognition and an integrated care delivery platform [9] Valuation Insights - Humana's current forward 12-month P/E ratio is 21.26X, which is above its five-year median of 17.69X and the industry average of 15.63X [10] - The stock is priced below the average analyst target of $284.87, indicating a potential upside of about 10% [11] Earnings Estimates - The Zacks Consensus Estimate for HUM's 2025 EPS is $17.08, reflecting a year-over-year growth of 5.4%, while revenues are expected to increase by 10% to $128.94 billion [12] Conclusion - Humana lacks a clear catalyst for immediate recovery, but the stock's recent sell-off may have already accounted for much of the operational and regulatory risks [13] - For current investors, maintaining positions may be the most rational strategy, while new investors are advised to monitor cost trends and reimbursement clarity before entering [14]

Every time Medicare open enrollment comes around, millions of older adults wrestle with the same annual dilemma: stick with their current plan or switch. Two influential voices — comedian John Oliver and personal finance expert Suze Orman — are making a forceful case for abandoning Medicare Advantage (MA). When high-profile figures offer such strong advice, it can be hard to ignore, even among the people who are satisfied with their MA plan. “If I’m satisfied with my Medicare Advantage plan, why are th ...

North America Equity Research December 2025 Healthcare Services 2026 Outlook: It's Different This Time: Potential for Margin Improvement and Policy Clarity Create a Positive Backdrop Conference Call Details Tuesday, December 17 @ 10:00am ET / 15:00 UK Dial-in Info: Please contact us or your JPM salesperson for details Replay Info: Available approximately 2-3 hours after the call ends Healthcare Services Lisa C. Gill AC (212) 622-6466 lisa.c.gill@jpmorgan.com Bloomberg JPMA GILL J.P. Morgan Securities LLC Ma ...

Core Viewpoint - UnitedHealth Group has faced significant challenges in 2025, with a year-to-date share decline of approximately 35%, marking its worst annual performance since 2008 [1] Financial Performance - The stock hit a 52-week low of around $235 in August but rebounded by roughly 46% to near $328 [2] - The company has lowered its earnings guidance for 2025 from an initial $29.50-30 per share to around $16.25 by the end of Q3 due to unexpectedly high medical costs in its Medicare Advantage business [3] - Revenue growth of 12% was reported in Q3, but profitability metrics declined, maintaining investor caution [5] Operational Challenges - The stock decline was influenced by high medical care ratios, reaching around 89%, and leadership changes, including the resignation of CEO Andrew Witty [3][4] - Ongoing investigations by the Justice Department into Medicare billing practices have added to the pressures faced by the company [4] Dividend and Cash Flow - UnitedHealth serves over 50 million consumers, with a year-over-year growth of nearly 800,000 members, generating trailing 12-month free cash flow exceeding $17 billion [6] - The company has a strong dividend track record, increasing payouts at double-digit rates over the past decade, with a current annual dividend of $8.84 per share [7] - With a payout ratio near 45%, the dividend is well-supported by earnings and cash flows, allowing for sustained growth [8] Valuation and Market Outlook - UnitedHealth trades at a trailing P/E of about 17.8, below historical averages, indicating potential investment opportunities [9] - Analysts maintain a consensus "Buy" rating with average price targets around $408 per share, suggesting over 20% upside [10] - An expected increase in Medicare reimbursements by up to 5% in 2026 and an aging population could lead to total returns of 15% to 20% in 2026 through dividend growth and stock appreciation [10] Investment Thesis - Despite the challenges faced in 2025, UnitedHealth's large membership base, strong cash generation, and conservative payout ratio position it favorably for future gains [12]

Key Takeaways Managed care stocks were pressured by high utilization, but pricing and cost trends are now stabilizing.UNH benefits from scale and Optum integration as margins normalize after earlier medical cost pressure.CVS and CNC show improving execution as pricing discipline and enrollment trends support 2026 earnings.The overall healthcare sector entered 2025 on shaky ground. Managed care stocks, especially HMOs, were weighed down by stubbornly high medical utilization, tighter reimbursement assumption ...

Core Viewpoint - UnitedHealth Group is expected to rebound in stock performance by 2026, despite facing challenges in 2023 due to misjudgments in cost projections and a significant drop in stock price [3][11][19] Company Overview - UnitedHealth Group is a Minnesota-based managed care company, the largest in the U.S. with approximately 23% market share, offering Medicare and Medicaid supplemental plans and health insurance for individuals and businesses [6][15] - The company has consistently raised its dividend for the last 16 years, currently yielding 2.25% per share, which is above the healthcare sector average of 1.6% [16][15] Financial Performance - In 2023, UnitedHealth Group's stock price has decreased by about 35%, primarily following a disappointing first-quarter earnings report that missed analysts' expectations for the first time since 2008 [7][11] - The third-quarter earnings report showed revenue of $113.2 billion, a 12% increase from the previous year, but earnings fell sharply to $4.3 billion from $8.7 billion in Q3 2024, with profit margins dropping to 2.1% from 6% [13][14] Challenges and Solutions - The company miscalculated service costs when setting 2025 customer premiums, leading to an increase in medical costs by $6.5 billion, which has impacted profit margins [11][12] - Management plans to rectify these issues by adjusting Medicare Advantage bids and potentially exiting unprofitable markets, targeting a profit margin range of 2% to 4% for 2026 and 2027 [12][11] Market Position and Valuation - UnitedHealth Group's current price-to-earnings ratio is 17.2, significantly lower than its five-year average of 25.2, indicating that the stock is undervalued at present [18][19] - The stock is expected to appreciate as the company addresses its profit margin issues, making it an attractive investment opportunity [19][18]

While many older Americans have struggled with the rising cost of living in 2025, an increase in Part B Medicare premiums in 2026 likely won’t make things any easier. In fact, this increase packs a one-two punch that will not only affect health insurance premiums, but Social Security benefits as well. The Centers for Medicare and Medicaid Services recently announced the monthly cost of Part B coverage would increase from $185 to $202.90 per month, an increase of 9.7%, CNBC reports (1). Must Read This in ...

Summary of Alignment Healthcare FY Conference Call (December 03, 2025) Company Overview - **Company**: Alignment Healthcare (NasdaqGS:ALHC) - **Industry**: Medicare Advantage Organization - **Membership**: Over 230,000 members across five states - **Growth Rate**: 46% growth in membership in 2025 - **Margin Improvement**: Expanded margins by 250 basis points in 2025 [3][3] Key Points and Arguments Membership Growth and Retention - **2026 Membership Growth Expectation**: Anticipated growth rate between 20% to 30%, with better-than-expected retention rates potentially pushing it above 30% [6][12] - **Churn Rate**: Historically around 6% to 7% during Annual Enrollment Period (AEP), with the company performing better than the industry average of approximately 16% [11][12] - **Product Design**: Adjustments made based on competitive analysis in various markets, leading to opportunities for growth [10][10] Market Position and Strategy - **California Market**: Represents 84% of membership; the company has room to grow despite approaching 30% to 40% market share in some counties [16][17] - **Expansion Outside California**: Significant growth expected, with a doubling of membership anticipated in states like Nevada, Texas, Arizona, and North Carolina [17][19] Industry Dynamics - **Overall MA Market Outlook**: Expected to be relatively flat due to product exits and competitive dynamics; larger competitors may struggle with medical management infrastructure [21][22] - **Care Delivery Focus**: Emphasis on care delivery capabilities as a core competency, differentiating from competitors who may not manage risk effectively [24][25] Care Delivery Model Enhancements - **Quality Care Initiatives**: Investments in provider relationships and care delivery systems to improve member experience and reduce admissions [30][34] - **Transition of Care Program**: Aimed at ensuring smooth transitions for members post-discharge, with a goal to reduce readmission rates [35][36] Financial Performance and Projections - **Revenue Growth**: Revenue projected to reach $4 billion, with a history of doubling every two years since IPO [29][29] - **MLR (Medical Loss Ratio) Improvement**: Strategies in place to improve new member MLR from approximately 90% at enrollment to low 80s over time [29][29] Regulatory Environment - **Impact of Proposed Rule Changes**: Concerns regarding the elimination of the Health Equity Index reward factor and its potential impact on star ratings for 2027 [41][43] - **Star Ratings**: The company aims to maintain a strong performance in star ratings despite regulatory changes [43][45] Additional Important Insights - **Fee Delegation**: The company has taken over certain functions from Independent Physician Associations (IPAs) to improve care delivery and reduce admissions [37][39] - **Operational Discipline**: Emphasis on maintaining operational discipline in growth strategies to avoid overextending resources [27][28] This summary encapsulates the key insights from the conference call, highlighting the company's growth strategies, market dynamics, and operational focus within the Medicare Advantage sector.

Valuation and Performance - UnitedHealth Group Incorporated (UNH) is currently trading at 18.48X forward 12-month earnings, which is below its five-year median P/E of 19.28X, indicating a slight discount relative to its historical norm [1] - The stock's valuation is above the Zacks Medical – HMOs industry average of 15.22X, suggesting that investors are pricing in a premium for the company's scale and stability [1] - Over the past six months, UnitedHealth shares have gained 7.3%, outperforming the broader industry's 1% decline but trailing the S&P 500's 17.1% surge [4] Growth Outlook and Market Conditions - The valuation of UnitedHealth raises questions about whether it is justified given the company's growth outlook and shifting market conditions [2] - Competitors Humana Inc. (HUM) and Elevance Health, Inc. (ELV) trade at 19.26X and 11.86X, respectively, indicating contrasting valuation setups across the sector [2] Margin Pressures and Operational Challenges - UnitedHealth faces margin strain from elevated medical costs, reimbursement limits, and choppy enrollment [6] - Concerns persist regarding whether medical expense growth will outpace pricing adjustments, potentially squeezing margins further [8] - The company is exiting Latin America, agreeing to sell Banmedica for $1 billion as part of operational streamlining [6][13] Membership Trends and Future Projections - Medicare Advantage enrollment is expected to fall by approximately one million members next year as UnitedHealth recalibrates its plan lineup [10] - The Zacks Consensus Estimate for 2025 EPS is $16.29, which is 41.1% lower than last year, but projected to rebound to $17.59 in 2026, representing an 8% improvement [15] - Revenue is expected to grow 11.9% in 2025 and 2.5% in 2026 [15] Long-Term Growth Potential - Despite near-term turbulence, UnitedHealth remains a powerhouse in U.S. healthcare, supported by rising healthcare spending, demographic aging, and increasing chronic disease rates [16] - The demand for higher-margin commercial offerings is expected to strengthen, although membership may fluctuate due to policy changes and subsidy reductions [17] Regulatory Scrutiny - The U.S. Department of Justice is examining UnitedHealth's Medicare billing processes and reimbursement practices, adding another layer of uncertainty [12]

Table of Contents Expand Table of Contents During open enrollment, you can decide between Medicare Advantage, and Original Medicare with Medigap. triloks / Getty Images Close Key Takeaways Original Medicare (Part A and Part B) has its upsides. Unlike Medicare Advantage, it doesn't limit you to using a particular provider network. You can get care at almost all U.S. hospitals and doctor offices, and you rarely need prior authorization for medical services or supplies. Warning Six states are testing pre-autho ...