Shares of UnitedHealth Group (UNH, Financial) dropped around 20% in Thursday's premarket trading after the health insurance giant posted weaker-than-expected Q1 2025 results and sharply cut its full-year earnings outlook.
The Minnesota-based firm now expects adjusted earnings of $26.00 to $26.50 per share for 2025, well below its previous projection of $29.50 to $30.00 made in December. The revised range also falls short of Wall Street's $29.74 consensus, driven by increased medical care costs and weaker-than-anticipated performance in its OptumHealth unit.
The company cited a surprising uptick in medical usage within its Medicare Advantage business, particularly for outpatient and physician services. Additionally, changes in OptumHealth's membership mix and the ongoing impact of Medicare reimbursement reductions contributed to the downgrade.
In Q1, UnitedHealth reported revenue of $109.6 billion, up roughly 10% year over year but more than $2 billion shy of consensus. Adjusted earnings also missed, coming in $0.09 under expectations.
The core insurance arm, UnitedHealthcare, delivered $84.6 billion in revenue, exceeding forecasts. However, OptumHealth and OptumInsight underperformed, while OptumRx outpaced projections with $35.1 billion in sales on the back of new and expanded client partnerships.
The medical care ratio rose to 84.8%, missing expectations for the sixth quarter in a row.
