UnitedHealth Group has adjusted its 2025 financial forecast following an unexpected increase in healthcare utilization by its Medicare Advantage customers, which led to a disappointing first-quarter performance. This development caused a significant drop in the company’s stock price early Thursday and sent ripples throughout the insurance sector.
The rise in care usage, which exceeded UnitedHealth’s original projections for 2025, became evident by the end of the quarter. The increase was particularly pronounced in outpatient and doctor services that do not require overnight hospital stays. As the largest provider of Medicare Advantage plans in the United States, UnitedHealthcare—a division of UnitedHealth—caters primarily to individuals aged 65 and above through these private-sector versions of federal government insurance.
UnitedHealth’s CEO acknowledged that the company fell short of expectations in the first quarter and emphasized ongoing efforts to address these challenges. The company has witnessed a similar trend of increased care usage following the conclusion of the COVID-19 pandemic as patients resumed regular medical appointments and other healthcare services.
In the first quarter, UnitedHealth reported adjusted earnings of $7.20 per share on $109.58 billion in revenue. These figures fell short of analyst expectations, which projected earnings of $7.29 per share on $111.53 billion in sales.
Looking ahead to 2025, UnitedHealth revised its earnings forecast to a range of $26 to $26.50 per share, a reduction from the previous estimate of $29.50 to $30. Analysts had forecasted earnings of $29.72 per share for that year. As a result, the company’s shares plummeted over 20% to $466.44 in premarket trading.
UnitedHealth’s quarterly report, often seen as a sector benchmark on Wall Street, triggered declines in the stock prices of other insurers. Humana Inc., the second-largest Medicare Advantage provider in the nation, experienced a 15% drop. Analysts suggest that UnitedHealth’s revised outlook may prompt a reevaluation of 2025 guidance across the insurance industry.
The Bottom Line
The unexpected rise in healthcare usage, particularly in outpatient services, has led to a reassessment of financial expectations within UnitedHealth Group, an indication of broader industry trends. As healthcare demands evolve post-pandemic, providers and insurers may need to adapt their strategies to align with changing consumer behaviors.
For policyholders, this could mean adjustments in premiums or coverage options as insurers recalibrate their financial models. Communities relying on Medicare Advantage plans may see shifts in service availability or plan structures. Financial markets will likely keep a close watch on how UnitedHealth and its peers navigate these developments, influencing investor confidence and stock performance in the health insurance sector.
