The Centers for Medicare & Medicaid Services (CMS) announced a 2.48% increase in Medicare Advantage payment rates for 2027, significantly higher than the 0.09% proposed in January. This decision will bring over $13 billion in additional payments to insurers, alleviating regulatory concerns for the managed-care sector. The announcement resulted in stock surges of over 8% for UnitedHealth Group (UNH) and Humana (HUM) on Monday.
UnitedHealth Group’s projected fiscal 2026 sales are expected to dip by 1%, but they’re anticipated to rebound by 4% in 2027, reaching approximately $457.29 billion. Meanwhile, Humana is projected to see a 24% sales increase this year, with further growth of 6% forecasted for fiscal 2027, hitting around $170.91 billion.
As stock valuations improve, UnitedHealth is trading at 15 times forward earnings, while Humana trades at 18 times—both below the S&P 500 average of 22 times. The more favorable reimbursement outlook may lead to positive earnings revisions for both companies moving forward.
