UnitedHealth Group has released a gloomy forecast for 2025, showing a slowdown in growth that falls well short of Wall Street’s expectation. The health insurance behemoth now projects at least $16 per share of adjusted earnings. This outlook would be much less than analysts’ predictions of $20.91/share. This announcement marks an exciting turn for the company. With the dynamic new leadership of Stephen Hemsley at the curb, the SC team is equally committed to restore investor confidence and aggressively address the runaway medical costs.
The company’s insurance unit, home to the nation’s largest insurer, UnitedHealthcare, is under major stress. Escalating medical costs are continuing to take a severe toll on its bottom line. In the most recent quarter, the second quarter this year, UnitedHealth’s medical care ratio was 89.4%. This is up from 85.1% at this time last year. This jump is testament to the continued squeeze of skyrocketing medical expenses. In recent years, this practice has come under fierce public criticism.
Hemsley took over as CEO after the surprise exit of his predecessor Andrew Witty in May. Since then, he’s been on the absolutely formidable journey of trying to turn around a business. This company is considered by many to be a model for the health insurance industry. Here’s Looking at Yous stock crater when UnitedHealth withdrew its 2025 guidance on these high medical expenses.
Though these challenges have been steep, Hemsley is hopeful that in future we can all recover. Tim Noel, a key figure within the company, stated, “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.”
Looking out over the next few years, UnitedHealth Group has already forecasted revenue for 2025 in the range of $445.5 billion to $448 billion. The subdued forecast for earnings has spooked investors and industry analysts as well. The company’s 2024 performance continued the trend making it no easier for Hemsley to win back trust in the company.