Humana Wins TVH Assets in Bankruptcy Sale, But Cut Points Drag Shares

Humana Inc. HUM, through its healthcare services businessCenterWell, has won court approval to acquire the assets of The Villages Health (“TVH”), a well-known medical group in Florida. The deal marks another step in Humana’s effort to expand its senior-focused primary care platform and strengthen ties to its Medicare Advantage (MA) membership base.

Per reports, the acquisition is valued at $68 million and expected to close in the fourth quarter this year. Humana is likely to receive eight primary care and two specialty care centers from the voluntary Chapter 11 reorganization. Beyond scale, it signals Humana’s determination to vertically integrate, combining insurance with care delivery to improve outcomes.

Still, the deal comes with challenges. TVH’s former business model, focused exclusively on MA patients, was tied to Medicare overpayments stemming from upcoding practices. Investors are questioning whether Humana can turn this distressed asset into a sustainable growth opportunity and how it might contribute to CenterWell’s broader payor-agnostic care offerings.

Meanwhile, CenterWell reported adjusted operating income of $404 million in the second quarter of 2025, up 2.5% year over year, though its operating cost ratio worsened by 70 basis points to 92.7%.

However, the market is more concerned right now about HUM’s ability to clear the tougher benchmarks in MA star ratings outlook for the next year. Recent reports indicate that Medicare Advantage’s bonus qualification thresholds, known as the “cut points,” have become more difficult to meet.

Investor sentiment soured, sending HUM shares down more than 12% yesterday. Meanwhile, major health insurer UnitedHealth Group Incorporated’s UNH shares gained 8.6% yesterday, after signaling confidence in its MA star ratings outlook for the next year. Another peer, Centene Corporation CNC, also saw its shares rise 7.7% yesterday. Both companies have gained from the optimism around industry prospects. UnitedHealth expects that 78% of its MA members will be enrolled in plans with quality ratings of 4 stars or higher next year.

Humana’s Price Performance, Valuation and Estimates

Despite the recent decline, HUM shares have increased 7.6% over the year-to-date period, while the industry fell 25.2%.

From a valuation standpoint, Humana trades at a forward price-to-earnings ratio of 18.97, up from the industry average of 16.17. HUM carries a Value Score of A.

The Zacks Consensus Estimate for Humana’s 2025 earnings is pegged at $16.99 per share, implying a 4.8% increase from the year-ago period.

The stock currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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