Key Takeaways:
Schubert Jonckheer & Kolbe LLP is investigating Humana Inc. over alleged false statements that preceded a 22% stock decline. The probe centers on whether the health insurer misled investors about its exposure to rising post-pandemic healthcare utilization costs.
"Current shareholders are encouraged to contact the firm," Dustin L. Schubert, a partner at Schubert Jonckheer & Kolbe, said in a statement.
The investigation follows an April 27 ruling by U.S. District Judge Jennifer L. Hall allowing key claims in a securities fraud lawsuit to proceed. The complaint alleges that between July 2022 and October 2024, Humana made false and misleading statements about its vulnerability to increased healthcare utilization costs, artificially inflating the stock price. During that period, company insiders sold more than $104 million in stock, according to the lawsuit.
The truth emerged in October 2024 when Humana reported sharp declines in Star ratings across many of its Medicare Advantage plans, sending shares down 22% in a single session. Judge Hall found the complaint sufficiently alleged that executives acted with scienter, or intent to defraud. Humana shares closed at $389.32 on July 24, down 1.31% on the day and 2.67% over the past five sessions, though the stock remains up 52% year to date.
The investigation adds legal overhang to a stock that has recovered much of its 2024 losses but now faces potential class-action liability. Humana reports second-quarter earnings on July 29, which will provide the first update on utilization trends since the judge's ruling. A finding of liability could expose the company to damages tied to the $104 million in insider sales and the subsequent shareholder losses from the October selloff.
This article is for informational purposes only and does not constitute investment advice.
