Fitch Downgrades Humana Credit Ratings Amid Medicare Advantage Payment Cuts

Fitch Ratings downgraded the credit ratings of Humana and several of its subsidiaries, citing a challenging outlook for revenue margin recovery. The downgrade reflects increased healthcare utilization across the sector and significantly reduced Medicare Advantage quality bonus payments, which have pressured Humana's earnings and financial metrics over recent years. Despite these difficulties, Fitch acknowledges Humana's strong competitive position in the Medicare Advantage market as a positive factor. Humana's debt-to-EBITDA ratio stood at 3.6x as of September, exceeding Fitch's guidelines for a higher credit rating, contributing to the downgrade to the lower end of investment-grade. The rating action follows the insurer's unsuccessful legal challenge against CMS's 2025 Medicare Advantage plan ratings, which affects expected government bonus payments and revenue. The insurer financial strength ratings for various Humana subsidiaries were also lowered by one notch but remain within upper-medium investment-grade levels. This development signals continued credit pressure linked to sector-wide healthcare utilization trends and regulatory payment adjustments affecting Medicare Advantage providers.