It’s a dramatic reversal for the health insurance behemoth, which recently slashed its annual profit forecast by as much as half. The company’s updated guidance puts its adjusted profit per share for 2025 in a range of $26-$26.50. This represents a drastic downward revision from the previous estimate of $29.50 to $30 per share. This reintroduction follows the trend of the incredibly high cost of medical care, which has risen even more than we ever could have feared.
The news sent the stock market down in shock, causing UnitedHealth’s stock price to collapse by 19%. In premarket trading, the stock was initially down between 3% and 13%. The health insurance sector would potentially suffer an eye-popping $130 billion+ in lost stock market valuation. This forecast change is the biggest factor behind the decrease.
UnitedHealth Group’s troubles are hardly an exception. They underscore serious, systemic pressures that have gripped the entire health insurance sector since summer 2023. Soaring expenses have forced countless private firms to reconsider their fiscal plans. UnitedHealth’s troubles have dragged down its competitors, including Elevance (formerly Anthem), CVS Health, Cigna, Centene, and Humana. Hospital operators such as HCA Healthcare and Tenet Healthcare saw their stock prices rise by 3% to 7%. Kickstarting this increase were UnitedHealth’s comments on the booming need for more medical care.
The company’s latest guidance has outpatient and physician services booming within its Medicare Advantage cogs. By design, these plans address the needs of older adults and people with disabilities. That increase in demand was much greater than UnitedHealth had expected for the increase they had intended to put in place for 2025.
Andrew Witty, CEO of UnitedHealth Group, acknowledged the company’s performance shortfall, stating, “UnitedHealth Group grew to serve more people more comprehensively but did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead.”
Market analysts were blindsided by such a drastic reduction in guidance. Kevin Gade, chief operating officer of Bahl & Gaynor, noted, “Nobody was expecting this level of a miss or cut to guidance.” He further emphasized the perception of UnitedHealth’s stock as a safe haven amidst economic uncertainties, saying, “This was a stock that was a safe haven for so many among tariffs and policy uncertainty.”