UnitedHealth Group’s 2025 Outlook Falls Short, Shares Drop

Phoenix, Arizona — UnitedHealth Group released its 2025 earnings outlook on Tuesday, disappointing Wall Street with figures that fell short of expectations. The company’s insurance division continues to face challenges due to rising medical costs.

In premarket trading, shares of UnitedHealth Group plummeted more than 3%. The company is projecting adjusted earnings of at least $16 per share and total revenue between $445.5 billion and $448 billion. Analysts had predicted adjusted earnings of $20.91 per share and full-year revenue of $449.16 billion, according to estimates from LSEG.

Concerns had already surfaced in May when UnitedHealth’s stock price dropped significantly after CEO Andrew Witty‘s sudden departure and the announcement of increased medical expenses. “While we face challenges across our lines of business, we believe we can resolve these issues and recapture our earnings growth potential while ensuring people have access to high-quality, affordable health care,” said Tim Noel, CEO of UnitedHealthcare.

The company’s medical care ratio for 2025 is expected to be between 89% and 89.5%. A lower ratio indicates that a company collects more in premiums than it pays out in benefits, suggesting improved profitability. However, the ratio increased to 89.4% in the second quarter, up from 85.1% the previous year, primarily due to rising medical costs.

UnitedHealth’s report also suggests that elevated medical costs in its Medicare Advantage plans may persist, posing a challenge for the health insurance sector as a whole. The company is the leading provider of privately run Medicare plans, which have seen increased expenses as more seniors seek procedures delayed during the Covid-19 pandemic.

Furthermore, the report arrives shortly after the Department of Justice launched investigations into UnitedHealth’s Medicare billing practices. Under the leadership of Stephen Hemsley, the company aims to restore investor confidence while addressing ongoing public scrutiny.

In the second quarter, UnitedHealth reported adjusted earnings of $4.08 per share on revenue of $111.6 billion, falling short of expectations, which had projected $4.48 per share on $111.5 billion in revenue. Rising medical costs, which represented the company’s largest operating expense, surged by 20% to $78.6 billion.

UnitedHealth historically sets the pace for health insurer earnings, but this reporting period has seen the company lag behind competitors like Elevance Health Inc. and Centene Corp., both of which have lowered their forecasts and reported disappointing results.

Shares fell to $272.51 on Tuesday morning, a stark contrast to over $630 last November. Combined with the ongoing financial pressures and management changes, the stock has seen a decline of 44% this year.