UnitedHealth Stock Plunges 22% as Profit Forecast Slashed
UnitedHealth Group (UNH) shares tumbled 22% on Thursday after the health insurance giant missed revenue expectations in the first quarter and slashed its full-year profit outlook, weighing heavily on the Dow Jones Industrial Average.
The company now expects adjusted earnings per share (EPS) of $26 to $26.50 for 2025, a sharp drop from its previous forecast of $29.50 to $30. In Q1, adjusted EPS came in at $7.27, matching consensus estimates, while revenue reached $109.6 billion—below the $111.6 billion analysts had expected, according to Bloomberg.
CEO Andrew Witty acknowledged the disappointing results, stating, “We did not perform up to our expectations.” The downward revision was primarily driven by escalating costs in UnitedHealth’s Medicare Advantage and Optum segments. Policy changes under the Biden administration reduced reimbursement rates for Medicare Advantage, forcing insurers to shoulder more expenses.
Adding to the challenge, seniors in the Medicare Advantage program utilized services at rates “far above” projections, driving the company’s medical care ratio up to 87.5% for 2025, compared to 85.5% last year.
Witty noted that many of the newly acquired Medicare patients were sicker than anticipated, having come from insurers exiting the market. “They experienced a surprising lack of engagement last year,” Witty said, affecting reimbursement calculations.
Despite the setbacks, Witty emphasized that the issues are “highly addressable” and reaffirmed the company’s growth trajectory, pointing to a net addition of 800,000 Medicare Advantage members and 650,000 new Optum Health patients.
UnitedHealth says it’s now working to more closely monitor high-risk patients and ensure better care engagement to regain stability.
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