UnitedHealth Faces Earnings Setback, Cuts 2025 Forecast
UnitedHealth Group left investors in dismay on Tuesday with second-quarter earnings that did not meet expectations, alongside a significantly lowered 2025 forecast. This news resulted in a more than 7% drop in shares as the healthcare behemoth continues to grapple with rising medical costs.
The company reported adjusted earnings of $4.08 per share on a revenue of $111.6 billion, falling short of the anticipated $4.48 per share. However, the real cause for concern was the new 2025 guidance from UnitedHealth, which now stands at a minimum of $16 per share in adjusted earnings. This figure is a stark contrast to Wall Street’s consensus estimate of $20.91 per share and a significant drop from the company’s initial expectations of up to $30 per share.
CEO Stephen Hemsley attributed the lackluster performance to medical costs escalating more rapidly than expected. This was especially evident in Medicare Advantage plans where expenses surged 20% to $78.6 billion. The company’s medical care ratio also worsened, moving from 85.1% in the previous year to 89.4%, indicating a rise in medical expenses in relation to premiums collected. Despite the current challenges, UnitedHealth anticipates a return to earnings growth in 2026 as it rolls out operational enhancements.
Source: CNBC