Barclays sees margin benefits from Humana, CVS Medicare Advantage exits

Barclays analyst Andrew Mok says that on Friday after the close, the Centers for Medicare and Medicaid Services released the 2025 Medicare Advantage landscape file, which provides a first glimpse into county-level plan offerings and core benefit changes before full plan details are released on October 1. Humana’s (HUM) and CVS Health’s (CVS) actions are largely inline with expectations with each reducing retail Medicare Advantage plans representing 16% and 23% of current membership, respectively. Assuming half are recaptured, Barclays estimates this could be about a 40 basis point margin benefit worth approximately $2.60 of 2025 earnings per share for Humana and a 60 point margin benefit worth approximately 20c of 2025 earnings per share for CVS. In addition, UnitedHealth (UNH) withdrew more retail Medicare Advantage plans than expected, with nearly 2,800 plan exits representing 15% membership focused on the east coast, contends the firm. Barclays believes this may limit the upside case on UnitedHealth’s market share gains and lead to more membership growth for Humana and CVS. The firm says Elevance Health (ELV) showed the highest increase in retail Medicare Advantage plan offerings, concentrated in the south, and reduced member premiums most among public plans. It believes Elevance is well positioned for market share gains in the northeast and mid-west and estimates mid-teens membership growth next year.