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The stock of UnitedHealth Group (UNH), the health-care giant, finished Thursday with a drop of more than 22%. It was the worst day for the stock in over 25 years. The company’s first quarter results were below analysts’ expectations and it lowered its profit forecasts through 2025.
UnitedHealth reported adjusted earning per share (EPS), which was $7.20, on revenue that grew 10% over the previous year to $109.58 billion. Visible Alpha’s analysts polled had predicted $7.25 and $111.46 Billion respectively.
Eden Prairie, Minnesota’s company, lowered their 2025 EPS forecast to a range from $24.65 to 25.15. They also reduced their projected adjusted EPS from $26 to 26.5. UnitedHealth announced last quarter that it was expecting to generate a full year EPS of between $28.15 and 28.65 as well adjusted EPS ranging from $29.50 – $30.
UnitedHealth attributed its outlook cuts to “increased care activity indicators” in its Medicare Advantage businesses, and “unanticipated change in the profile of Optum Health Members impacting planned 2025 payment.”
CNBC reported that analysts believe that insurers like UnitedHealth will face higher costs as a result of the lower reimbursements by the government for Medicare Advantage plans and rising medical costs.
As UnitedHealth shares closed Thursday with their fourth-worst performance since the company went public in 1984, shares of other health insurers like CVS Health (CVS), Humana (HUM), Elevance Health (ELV), and Centene (CNC) also were dragged lower Thursday by the cost concerns.
CEO Says UnitedHealth 'Did Not Perform Up to Our Expectations'
CEO Andrew Witty said the company "did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead."
UnitedHealth shares opened the day up by about 16% from the beginning of the year. They recovered from a February drop following a report the U.S. Department of Justice would be investigating the company’s diagnosing practices.
UPDATE—This article has been updated with the latest share price information and analysis.
