• Humana’s stock is down 23% in its worst weekly drop since 2020 and biggest two-day decline since 2009.

• The drop comes as Medicare downgraded ratings on some of Humana’s health insurance plans.

• The move is expected to be a drag on the company’s revenue and customer base.

It’s been a tough week for Humana.

The health insurer’s shares are down 23% since the start of the week, marking its biggest weekly drop since 2020 and its biggest two-day decline in 15 years.

The shares were up about 2% on Friday to trade at $246.80. They began the week at around $320 a share.

The tailspin comes as Medicare plans to downgrade several of Humana’s key health insurance plans, which will limit the extra revenue those plans pull in from government payouts starting next year.

The news first circulated on Tuesday, and on Wednesday, the company confirmed the news in a statement, sending the stock down 24% in the first five minutes of trading.

Over those days, the stock declined 22%, the biggest two-day drop since the financial crisis in 2009. The shares are on track for their worst week since 2020.

Medicare’s quality ratings are crucial revenue drivers for Medicare Advantage insurers like Humana, which receive government bonus payments for higher star ratings. Lower ratings, on the other hand, deter customers. The ratings fall on a scale of one to five.

With the new ratings shake-up, now only 25% of Humana’s customers will fall under its four-star or higher plans, down from 94%, the company said in a statement.

In a Wednesday note, UBS analysts led by AJ Rice said Humana’s downgrades are the “worse case scenario for stars.”

The company says it is working to regain its ratings, and is appealing the changes.

Bank of America analysts say that full recovery could take longer than expected, though. The analysts downgraded the stock to underperform on Wednesday, cutting its price objective by 34% to $247.

They said Medicare Advantage plans could see further pressure if Democrats win in the upcoming elections, which would hinder Humana’s recovery.

“The timing of the recovery is far from guaranteed, particularly if the election results in a win for Democrats and MA plans are pressured as they are demonstrating here with lower Stars,” the analysts said, adding that Humana faces tough competition with peers like UNH.

“We think there is a risk that HUM loses some market share,” the analysts said.

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