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By Sriparna Roy

Feb 11 (Reuters) - Humana HUM.N forecast annual profit below Wall Street estimates on Tuesday and said it anticipates a greater-than-expected decline in its Medicare Advantage plan enrollment due to a planned exit from some markets.

Shares of the company were down 7% at $247.90 in afternoon trading after the health insurer gave the disappointing outlook on memberships.

Humana, a top provider of Medicare Advantage plans under which the U.S. government pays private insurers a set rate to manage healthcare for people aged 65 and older or with disabilities, has struggled with elevated medical costs for the last few quarters.

The company said memberships in its full year individual Medicare Advantage plans are expected to decline by 550,000 people, compared to its previous expectation of declining "a few hundred thousand" members.

The insurer said it expects annual adjusted profit per share of about $16.25, in line with its previous expectations, but fell short of analysts' estimate of $16.71 per share, according to data compiled by LSEG.

Besides the higher costs, Humana's Medicare plans took a further hit in October after they experienced a drop in the "Star" or quality ratings for this year, which can sway memberships and determine government reimbursement rates for 2026.

Humana had sued the Center for Medicare and Medicaid Services to contest the ratings.

Odds of the ratings case probably remain no better than a coin toss, said Leerink Partners analyst Whit Mayo.

The company plans to make incremental investments of 'a few hundred million' dollars to help improve its ratings and other performance areas.

"We can do more to support our members with reminders to do preventative care and to manage their chronic illnesses," said Humana CEO James Rechtin.

It sees first-quarter earnings to be about 60% to 65% of its 2025 profit, driven by addition of deductibles from Inflation Reduction Act, changes in benefits and favorable seasonality.

Humana's medical cost ratio, the percentage of premiums spent on medical care, rose to 91.5% from 90.7% a year earlier. Analysts had expected the ratio to be 91.3%.

On an adjusted basis, Humana's fourth-quarter loss of $2.16 per share met estimates.

(Reporting by Sriparna Roy in Bengaluru; Editing by Pooja Desai and Leroy Leo)

((Sriparna.Roy@thomsonreuters.com))