UnitedHealth Group shares crashed in premarket trading after the company reported weaker-than-expected Q1 results and issued a significant downward revision to its full-year guidance, citing higher-than-expected Medicare needs.
Here's a summary of UHG's mixed first-quarter earnings report:
Adjusted EPS came in at $7.20, up from $6.91 y/y, but missed the $7.27 Bloomberg Consensus estimate.
GAAP EPS was $6.85, compared to a loss of $1.53 per share y/y.
Revenue totaled $109.58B, up 9.8% y/y, but below the $111.56B estimate.
Highlights:
UnitedHealthcare revenue: $84.62B, up 12% y/y (beat est. $83.87B).
Optum revenue: $63.9B, up 4.7% y/y (missed est. $67.17B).
OptumRx: $35.13B, +14% y/y (beat est. $34.29B).
OptumHealth: $25.31B, down 5.3% y/y (missed est. $28.89B).
OptumInsight: $4.63B, +2.8% y/y (missed est. $5.1B).
Margins & Ratios:
Medical Care Ratio: 84.8%, better than 85.8% est.
Operating Cost Ratio: 12.4%, down from 14.1% y/y (beat est. 12.5%).
Operating Margin: 8.3%, slightly below 8.45% est.
UHG CEO Andrew Witty stated in a press release:
"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, and return to our long-term earnings growth rate target of 13 to 16%."
UHG slashed its full-year profit forecast...
New Adjusted EPS guidance: $26.00–$26.50, slashed from prior $29.50–$30.00 vs. $29.73 est.
A sharp downside surprise: New EPS guidance: $24.65–$25.15
UHG wrote that these two factors drove its revised outlook:
Heightened care activity indications within UnitedHealthcare's Medicare Advantage businesses, which became visible as the quarter closed, far above the planned 2025 increase which was consistent with the elevated levels in 2024. This activity was most notable within physician and outpatient services
Unanticipated changes in the profile of Optum Health members impacting planned 2025 reimbursement due to unexpectedly minimal 2024 beneficiary engagement by plans exiting markets. In addition, a greater-than-expected impact to current and new complex patients from the ongoing Medicare funding reductions enacted by the previous administration.
"The company believes these factors to be highly addressable over the course of this year as well as it looks ahead to 2026," the company noted.
Shares of UnitedHealth crashed 19% in premarket trading, wiping out most of the gains recorded since February's low of around $450 a share.
UHG has faced ongoing turmoil since the December killing of UnitedHealthcare CEO Brian Thompson. The company is now working to repair its image amid growing public outrage over the healthcare system.
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