Humana (NYSE: HUM) has agreed to a $2.8 bn transaction with BlackRock that will restructure ownership of nearly 150 CenterWell Senior Primary Care clinics, providing additional capital and financial flexibility as the US health insurer prepares for a recovery in Medicare Advantage profitability.
Announced on October 13, the agreement will replace Welsh, Carson, Anderson & Stowe (WCAS) as Humana’s private equity partner. Funds and accounts managed by HPS Investment Partners, part of BlackRock, will acquire WCAS’s majority ownership stake.
- BlackRock will acquire WCAS’s majority stake in a joint venture covering nearly 150 CenterWell clinics, valued at approximately $2.8 bn. Humana will retain minority ownership and operational control.
- Humana’s 2027 Medicare Advantage star ratings improved substantially, with 95% of members in plans rated four stars or higher. Evercore ISI estimates the insurer could receive $4.8 bn in quality bonus payments in 2028.
- S&P Global Ratings affirmed Humana’s BBB credit rating but maintained a negative outlook, citing execution risks surrounding its planned recovery in profitability and financial leverage.
Humana’s CenterWell division will retain a minority interest and continue managing and operating the clinics. The arrangement preserves its existing healthcare delivery operations while introducing a new long-term investment partner.
The $2.8 bn valuation applies to WCAS’s equity stake rather than representing proceeds payable directly to Humana.
Evercore ISI analyst Elizabeth Anderson said the transaction’s principal benefit is the additional time it gives Humana to develop its clinic portfolio, improve profitability and defer decisions about acquiring the facilities outright.
BlackRock deal reduces Humana’s balance sheet obligations
The new partnership changes the financial structure of Humana’s existing joint ventures, which have helped expand CenterWell’s senior-focused primary care network over the past seven years.
Unlike the previous arrangements, the BlackRock joint venture will not include an investor put option requiring Humana to purchase the investor’s interest under specified conditions.
Humana expects removing those obligations to significantly reduce liabilities on its balance sheet and lower its cost of capital.
The transaction will still create a derivative liability because CenterWell has agreed to certain minimum return protections for BlackRock. That instrument will be measured at fair value, according to Humana’s regulatory filing.
Over the next two years, the joint venture is expected to deploy additional capital to support existing clinics, establish new locations and expand through acquisitions.
Starting in 2028, CenterWell will have the option to purchase clinics from the venture. If it has not acquired all the facilities by the end of 2033, BlackRock can initiate a sale process, with CenterWell retaining the right to submit the first offer.
The agreement represents Humana’s second transaction involving BlackRock in 2026. In June, the insurer announced plans to divest all or substantially all of its minority stake in hospice and palliative care provider Gentiva to an investor consortium that includes BlackRock.
The CenterWell transaction is expected to close in the fourth quarter of 2026, subject to federal and state regulatory approvals.
Humana does not expect a material change to its 2026 adjusted earnings guidance, although the restructuring could affect reported GAAP earnings through changes in the valuation of financial obligations.
Medicare Advantage star ratings improve Humana’s 2028 outlook
The BlackRock agreement follows a substantial improvement in Humana’s Medicare Advantage quality ratings, which could provide a significant increase in government payments beginning in 2028.
According to Medicare ratings released by the Centers for Medicare & Medicaid Services (CMS) on October 8, approximately 95% of Humana’s Medicare Advantage members are enrolled in contracts rated four stars or higher for 2027, compared with the 20% figure previously reported for 2026.
The result exceeded J.P. Morgan’s expectations of 60% to 70%. Humana reported that 42% of its Medicare Advantage membership is in contracts rated 4.5 stars. The insurer has six contracts with 4.5-star ratings and 12 with four-star ratings, representing 11 additional contracts rated at least four stars compared with the preceding year.
The improvement followed stronger performance across prescription drug quality, health plan measures, preventive care and hospital readmissions.
Medicare Advantage star ratings determine insurers’ eligibility for federal quality bonus payments and influence the funding available for member benefits.
Evercore ISI estimates Humana could receive approximately $4.8 bn in bonus payments in 2028. S&P Global Ratings separately estimates that the ratings improvement could increase Humana’s Medicare Advantage payments by approximately $3.6 bn year over year in 2028. The estimates use different financial measures and should not be treated as equivalent forecasts.
Humana’s own analysis indicates potential star-related revenue of approximately $160 per member per month in 2028, compared with an industry peer median of $105 under standardized assumptions.
Actual revenue will depend on membership, contract distribution, risk scores and federal payment benchmarks.
The company expects some of its performance above the top-quartile benchmark to be temporary and plans to allocate part of the resulting financial benefit toward one-time investments and shareholder returns.
Analysts at Baird also cautioned that the ultimate earnings contribution will depend on how much additional funding Humana reinvests in member benefits and healthcare provider agreements.
Humana outperforms competitors on quality ratings
The recovery places Humana ahead of several major Medicare Advantage competitors. J.P. Morgan estimates that UnitedHealth Group’s share of members in contracts rated four stars or higher will decline to approximately 67% in 2027 from 81% in 2026.
For CVS Health, the corresponding proportion is expected to fall to around 70% from 84%.
Across the industry, CMS reported that approximately 71% of Medicare Advantage prescription drug plan enrollees are currently in contracts rated at least four stars for 2027.
Humana’s 95% figure substantially exceeds that benchmark, although differences in enrollment populations affect direct comparisons.
The improvement follows two difficult rating cycles. Earlier declines had threatened Humana’s government bonus payments and contributed to pressure on its earnings outlook.
In October 2025, the company lost a legal challenge involving the methodology used to calculate its 2025 star ratings.
S&P maintains negative outlook despite ratings recovery
On October 13, S&P Global Ratings affirmed Humana’s BBB long-term issuer credit rating and A- financial strength ratings for its insurance subsidiaries.
The agency maintained a negative outlook, reflecting uncertainty about the company’s ability to restore operating margins and reduce financial leverage.
S&P expects Humana’s operating performance to remain weak through 2027 because earlier star rating declines will continue affecting government payments.
The agency views the latest ratings recovery as an important step toward improving Medicare Advantage profitability in 2028.
Its assessment identifies a Medicare Advantage margin of at least 3% and financial leverage of approximately 40% as important benchmarks for restoring the company’s credit profile.
Humana continues to target adjusted earnings of at least $9.00 per share for 2026.
The insurer’s next quarterly earnings announcement is scheduled for November 6, followed by an investor update on December 10 covering its longer-term financial objectives.
Humana shares reflect stronger earnings expectations
Humana shares surged approximately 15% on October 9 after the Medicare Advantage ratings announcement, reflecting investor expectations for higher government payments and improved profitability. The stock closed at $432.20 on October 15, remaining below its recent 52-week high of $456.50.
The combination of improved Medicare Advantage ratings and the restructured CenterWell partnership strengthens Humana’s financial outlook for 2028, although the two developments affect the business differently.
Higher quality ratings could increase insurance revenue, while the BlackRock agreement is intended to reduce capital requirements and support expansion of Humana’s healthcare services operations.
The immediate financial impact of the joint venture is expected to remain limited. Its longer-term contribution will depend on clinic profitability, the deployment of additional investment capital and Humana’s ability to convert higher Medicare Advantage payments into sustainable earnings.
