UnitedHealth Group experiences earnings miss, lowers outlook due to increased medical costs and lower demand
From Yahoo Finance: 2025-04-17 06:00:00
UnitedHealth Group reported an “unusual and unacceptable” earnings miss, leading to a more than 20% selloff in shares. The company cited higher-than-expected medical costs and lower demand for medical services. This marks the first earnings miss since 2008, causing UnitedHealth to lower its full-year outlook. Shares were down 23%.
The health insurer’s Optum business faced challenges due to increased need for medical care and unanticipated changes impacting planned reimbursements. Other insurers initially slumped but recovered slightly after rival Elevance Health maintained its quarterly outlook. The industry has been struggling with rising costs since mid-2023.
UnitedHealth Group saw pressure on its Optum Health unit, with increased demand for care and effects of Medicare funding cuts. The company added more patients, underestimating revenue while facing lower-than-expected payments from the government. Reimbursement rates did not reflect patients’ actual health status.
UnitedHealth now expects adjusted profit per share for 2025 to be between $26 and $26.50, down from the previous forecast of $29.50 to $30. Analysts had expected $29.73 per share. The insurer’s stock rallied before the earnings report, but industry peers like Elevance, CVS Health, Cigna, Centene, and Humana were down between 1% and 6%.
The health insurance industry has faced challenges in 2024, including lower government payments, higher medical costs, and public backlash following the murder of a UnitedHealth insurance unit head. The fatal shooting led to social media backlash and patient dissatisfaction. Despite market volatility, insurer stocks have been a safe haven.
Read more: UnitedHealth shares crash after surprise earnings miss, cuts to forecast