UnitedHealth stock has fallen more than 20%, to its biggest drop in more than 26 years
Due to higher medical expenses
Medicare Advantage requirements exceed UnitedHealth’s expectations
Forecast cuts surprise investors, triggering range selling
(Added CEO and executive comments in paragraphs 9 and 10, updated stock)
Sriparna Roy and Bhanvi Satija
April 17 (Reuters) – UnitedHealth Group expressed surprise to investors, with its CEO saying “unusual and unacceptable” quarterly earnings lost and its full-year outlook reduced its full-year outlook due to exceeding expectations for health care expenses, which caused the industry-wide stake to sell more than 20%.
The company’s first loss of earnings since 2008 and BLEAK forecasts sending investors to exports as they hope U.S. insurers will maintain their expected profit outlook for similar demand for healthcare services to 2024.
“No one is expecting this missed or cuts guidance,” said Kevin Gade, chief operating officer of Bahl & Gaynor, which owns UnitedHealth stock.
UnitedHealth reported adjusted earnings of $7.20 per share, also below expectations of $7.29 per share.
Since mid-2023, the U.S. health insurance industry has been struggling to cope with the increase in costs due to surge in demand for government-supported health care programs for older people or disabled people.
UnitedHealth said the cost of patient care in its Medicare Advantage business is higher than expected, led by physicians and outpatient services.
Its Optum Health division, including the prescription drug program it runs for Medicare, is also under pressure from patients who need more care, and the ongoing impact of funding cuts for the Medicare program implemented under Biden Administration.
The company has added more patients to its Optum business, part of which has been added from programs that are no longer available.
The surprising lack of engagement among these patients last year has resulted in government payments that were much lower than the company expected in 2025.
Witty said the reimbursement rate “does not reflect its actual health status.”
Tim Noel, CEO of UnitedHealthCare, the company’s insurance company, said patients seeking follow-up visits with experts incur higher costs for the insurance business.
The Medicare program, a group of companies that serve retirees, usually pays for more services, also reduces the use of their plans and leaves the company with low-income patients.
“We’ve never seen this dynamic before,” Noel said. These pressures have to do with cutting Medicare.
UnitedHealth Group now expects adjusted profit per share to be between $2025 and $26.50 per share, compared with a previous forecast of $29.50 to $30 per share. Analysts expect earnings per share in 2025 to be $29.73, according to LSEG data.
Insurers’ shares rose nearly 12% in the 10 days before Thursday’s results. By noon and near noon, it traded down 23% to $449.
Industry peers fell to include Elevated, CVS Health, Cigna, Centene and Humana. They fell 1% to 7%, and if held in the loss, the industry is valued at more than $100 billion.
Competitor Elevance reported its quarterly results on April 22 and said Thursday it intends to reiterate its annual profit forecast.
TD Cowen analyst Ryan Langston said today’s comments will question all other health insurance peers.
In the second half of last year, health insurance stocks were hurt by payments from lower governments, higher medical expenses and open opposition to the department.
Thompson’s fatal shooting also unleashed a storm of social media dissatisfaction with patients and anger at the practices of the health insurance industry, which exacerbates the company’s plight.
But despite the escalation of tariffs on President Donald Trump, insurers’ stocks have performed better in the past few months.
“It’s a safe haven and policy uncertainty,” Gad said.
(Reported by Bhanvi Satija and Sriparna Roy in Bangalore, Amina Niasse in New York; Editors of Anil D’Ilsva and Marguerita Choy)
