UnitedHealth Group cut its 2025 earnings forecast on Thursday, triggering a steep sell-off in its stock after first-quarter results revealed a surge in medical costs for its Medicare Advantage business.
Shares of the Minnesota-based health care giant dropped 22% to $454.15, erasing more than $130 per share in value – the company’s largest single-day percentage decline since 1999. The disappointing results also sent shockwaves across the health insurance sector, though no peer company saw declines as severe.
Company executives attributed the earnings miss to a sharp and unexpected rise in care utilization among Medicare Advantage enrollees, with usage rates doubling internal projections, according to an Associated Press report. CEO Andrew Witty, speaking during a call with analysts, described the quarterly performance as “frankly unusual and unacceptable,” but said the issue was temporary and could be corrected.
The increased utilization did not extend to UnitedHealth’s commercial or Medicaid lines, according to company officials.
UnitedHealthcare – UnitedHealth Group’s insurance arm – is the largest provider of Medicare Advantage plans in the US, covering more than 8 million people. The plans, which are privately administered versions of federal Medicare, have come under financial strain in recent years amid rising care costs and reduced government reimbursement rates.
Daniel Barasa, portfolio manager at Gabelli Funds, said profit margins in the Medicare Advantage space have been squeezed, but added that a recently approved rate increase for 2026 could ease some pressure beginning next year.
Despite the cost challenges, UnitedHealth still reported a $6.3 billion profit for the quarter. That compares with a $1.41 billion loss during the same period a year ago, when the company incurred significant costs related to a cyberattack on its Change Healthcare unit.
The company now expects adjusted earnings of between $26 and $26.50 per share for 2025 – a significant revision from the earlier range of $29.50 to $30 per share announced in December and reaffirmed in January. Analysts had forecast $29.72 per share for the year.
UnitedHealth, which is often seen as a bellwether for the insurance sector due to its size and early reporting, dragged down the broader market Thursday. It is a component of the Dow Jones Industrial Average.
The company also disclosed that it is cooperating with a federal investigation, though details of the probe were not disclosed.
Shares of other major insurers, including Elevance Health, also declined following UnitedHealth’s announcement, though to a lesser extent. Elevance – which covers more than 2 million Medicare Advantage members – indicated in a regulatory filing that its first-quarter results would meet or exceed expectations.
“While cost trends in Medicare Advantage remain elevated, the (company’s) first-quarter experience was consistent with its expectations and pricing,” the Indianapolis-based insurer stated.
UnitedHealth stock has fallen sharply from its all-time high of more than $630 reached in November 2023.
