UnitedHealth Group reports mixed second quarter earnings; stock down in premarket trading
The company reported revenues of $111.6 billion, compared to Wall Street expectations of $111.53 billion, and adjusted earnings per share (EPS) of $4.08, compared to $4.59 expected by the Street. Revenues are up nearly $13 billion year over year compared to the second quarter in 2024. But margins have shrunk from 4.3% in 2024 to 3.1% this quarter.
The company also updated its guidance for the full year after pulling it last quarter. It now expects revenues between $445.5 and $448.0 billion and adjusted earnings of at least $16 per share.
UnitedHealth's stock fell more than 5% in trading Tuesday.
Read more: Live coverage of corporate earnings
Industry pressure
More patients seeking care means more premiums being paid out and less revenue for health insurers. Typically, insurers aim to be on the lower end of between 80% and 85% of the premiums they receive, known as the medical expense ratio.
UnitedHealth reported 89.4% this quarter, compared to 84.8% in the first. That number is the highest in the company's history, breaking its 2024 record of 85.5%, which was attributed to higher utilization of care by seniors.
Other insurers have reported 90% or more in the second quarter this year — a significant jump from prior quarters, and it's all related to Medicare or Medicaid programs. This marks a continuing trend that has been plaguing the industry since last year and has taken several stocks for a ride every quarter.
Notably, CVS (CVS) saw a hit to its stock after its Aetna Medicare costs came in higher than expected, but then its stock was boosted last quarter as fears of costs were allayed. This quarter, Centene (CNC) and Elevance (ELV) have faced higher-than-expected costs.
The hit to UnitedHealth on Tuesday appears to be a delayed part of that trend — and the company has acknowledged that it, like other big insurers, is surprised by the hit. Especially with the company's focus on revenue management, owning and acquiring companies over the years would rely on technology to streamline and increase profits.
The result of the inaccurate cost assumptions will be felt by patients next year, as UnitedHealth announced it will exit several markets, impacting 600,000 patients. That's in the Medicare Advantage market alone. It also anticipates heavy losses in the Affordable Care Act marketplace, as enhanced subsidies from the pandemic expire. On top of which, premiums are likely to rise next year as the company looks to boost revenues and profits.
Industry change
In addition to the insurance market woes, UnitedHealth has faced internal struggles. Former CEO Andrew Witty was ousted in May. Former CEO and board chair Stephen Hemsley then took the helm.
The executive shake-up came after a year of turmoil for the company, including the largest-ever cyberattack on its Change Healthcare subsidiary. Meanwhile, the company is still reeling from the death of insurance executive Brian Thompson, who was shot and killed in New York City last year.
The incident prompted an awakening in the insurance industry, which faced a backlash for its system of prior authorization requirements that result in denials of care. Several companies and the Trump administration have pledged to fix the problems and relax prior authorization burdens for patients.
Humana executives said last week during an earnings call that the company would reduce prior authorizations by one-third of the current volume. UnitedHealth previously said that it only sees prior authorizations for 2% of total claims and that it will further reduce that amount.
UnitedHealth said Tuesday the company is focused on greater transparency with Hemsley leading and expects to continue offering greater insight into its operations as it rebuilds the company.
'UnitedHealth Group has embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society broadly,' CEO Stephen Hemsley said in a statement. 'As we strengthen operating disciplines, positioning us for growth in 2026 and beyond, the people at UnitedHealth Group will continue to support the millions of patients, physicians and customers who rely on us, guided by a culture of service and longstanding values.'
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, provider services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Wire
10 minutes ago
- Business Wire
Maximus Reports Fiscal Year 2025 Third Quarter Results
TYSONS, Va.--(BUSINESS WIRE)-- Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and nine months ending June 30, 2025. 'Our third quarter results reflect once again the resilience of our business model that is underpinned by consistent delivery at scale of critical government services,' - Bruce Caswell, President and Chief Executive Officer Share Highlights for the third quarter of fiscal year 2025 include: Revenue increased 2.5% to $1.35 billion, compared to $1.31 billion for the prior year period. Organic growth was 4.3% driven primarily by strong performance in the U.S. Federal Services Segment. Diluted earnings per share were $1.86 and adjusted diluted earnings per share were $2.16, compared to $1.46 and $1.74, respectively, for the prior year period. The company is raising revenue and earnings guidance for fiscal year 2025. Full-year revenue is expected to range between $5.375 billion and $5.475 billion. Adjusted EBITDA margin is expected to be approximately 13% and adjusted diluted earnings per share are expected to range between $7.35 and $7.55 per share for the full fiscal year 2025. A quarterly cash dividend of $0.30 per share is payable on August 31, 2025, to shareholders of record on August 15, 2025. 'Our third quarter results reflect once again the resilience of our business model that is underpinned by consistent delivery at scale of critical government services,' said Bruce Caswell, President and Chief Executive Officer. 'We are grateful to play a central role in supporting our customers' missions by delivering essential services efficiently and accountably." Caswell added, 'Over the 50 years that Maximus has served as a trusted and impartial delivery partner for government, we've consistently demonstrated adaptability as legislation and regulatory changes lead to new program imperatives and advanced technologies like AI reshape citizen services." Third Quarter Results Revenue for the third quarter of fiscal year 2025 increased 2.5% to $1.35 billion, compared to $1.31 billion for the prior year period. Organic growth was 4.3% primarily due to the U.S. Federal Services Segment and, to a lesser degree, contributions from the Outside the U.S. Segment. The U.S. Services Segment delivered expected results following the prior year period's over-performance from Medicaid-related activities. For the third quarter of fiscal year 2025, operating margin was 12.3% and the adjusted EBITDA margin was 14.7%. This compares to margins of 10.8% and 13.1%, respectively, for the prior year period. Diluted earnings per share were $1.86 and adjusted diluted earnings per share were $2.16. This compares to $1.46 and $1.74, respectively, for the prior year period. U.S. Federal Services Segment U.S. Federal Services Segment revenue for the third quarter of fiscal year 2025 increased 11.4% to $761.2 million, compared to $683.3 million reported for the prior year period. All growth was organic and driven primarily by a trend across this fiscal year of elevated volumes on programs in the clinical portfolio. The segment operating margin for the third quarter of fiscal year 2025 was 18.1%, compared to 15.5% reported for the prior year period. Processing of elevated volume on behalf of our customers across several different program areas provided additional benefit to this quarter's margin. The full-year fiscal 2025 operating margin for the U.S. Federal Services Segment is now expected to be approximately 15%. U.S. Services Segment U.S. Services Segment revenue for the third quarter of fiscal year 2025 decreased 6.9% to $439.8 million, compared to $472.3 million reported in the prior year period. Similar to the first two quarters of this year, the decrease resulted from the prior year period containing excess volumes from Medicaid-related activities, including the unwinding exercise that drove extra redeterminations. The segment operating margin for the third quarter of fiscal year 2025 was 10.2%, compared to 13.0% reported for the prior year period. The higher margin in the prior year period was a direct benefit of the excess volumes that were temporary. The full-year fiscal 2025 operating margin for the U.S. Services Segment is now expected to be approximately 10.5%. Outside the U.S. Segment Outside the U.S. Segment revenue for the third quarter of fiscal year 2025 decreased to $147.4 million, compared to $159.3 million reported in the prior year period. The revenue reduction was due to the divestitures of multiple employment services businesses in prior periods, and partially offset by positive organic growth of 7.3%. The segment operating margin for the third quarter of fiscal year 2025 was 4.0%, compared to an operating loss of 0.9% in the prior year period. A trend of improved profitability for the segment across this fiscal year continues following the divestitures of multiple employment services businesses. Sales and Pipeline Year-to-date signed contract awards at June 30, 2025, totaled $3.37 billion, and contracts pending (awarded but unsigned) totaled $1.44 billion. The book-to-bill ratio at June 30, 2025, was 0.8x as calculated on a trailing twelve-month basis. The sales pipeline at June 30, 2025, totaled $44.7 billion, comprised of approximately $3.05 billion in proposals pending, $1.20 billion in proposals in preparation, and $40.4 billion in opportunities we are tracking. New work opportunities represent approximately 63% of the total sales pipeline. Balance Sheet and Cash Flows At June 30, 2025, unrestricted cash and cash equivalents totaled $59.8 million, and gross debt was $1.67 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended June 30, 2025, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 2.1x compared to 1.9x at March 31, 2025. The current debt ratio stands at the low end of our 2x to 3x target net leverage range and recent quarters of increased borrowings are due to a combination of Maximus common stock purchases and temporary working capital needs. For the third quarter of fiscal year 2025, cash used in operating activities totaled $182.7 million and free cash flow was an outflow of $198.2 million. Operating cash flows were impacted primarily by payment delays on two large programs as contemplated in prior guidance in which Days Sales Outstanding (DSO) were estimated to peak in this quarter-ended June 30, 2025. DSO were 96 days at June 30, 2025, compared with 73 days at March 31, 2025. Subsequent to June 30, 2025, collections have improved substantially and are anticipated to continue through the end of this fiscal year. As a result, fiscal year 2025 guidance for free cash flow is increasing. The current Board of Directors authorization announced in December 2024 has $65.8 million available for future purchases of Maximus common stock. On July 5, 2025, our Board of Directors declared a quarterly cash dividend of $0.30 for each share of our common stock outstanding. The dividend is payable on August 31, 2025, to shareholders of record on August 15, 2025. Raising Fiscal Year 2025 Guidance Maximus is raising revenue, earnings, and free cash flow guidance for fiscal year 2025. Revenue guidance is increasing by $100 million at the midpoint and is now expected to range between $5.375 billion and $5.475 billion. The full year adjusted EBITDA margin guidance, which excludes divestiture-related charges, improves by 130 basis points to approximately 13%, compared to prior guidance. Guidance for adjusted diluted earnings per share, which excludes expense for amortization of intangible assets and divestiture-related charges, increases by $1.00 at the midpoint and is now expected to range between $7.35 and $7.55 per share for fiscal year 2025. Free cash flow guidance increases by $10 million at the midpoint and is now expected to range between $370 million and $390 million for fiscal year 2025. Interest expense is now estimated to be $81 million for fiscal year 2025. The full year tax rate is still expected to range between 28% and 29% and the weighted average shares outstanding forecast of approximately 58 million shares is unchanged for fiscal year 2025. Conference Call and Webcast Information Maximus will host a conference call this morning, August 7, 2025, at 9:00 a.m. ET. The call is open to the public and available by webcast or by phone at: 877.407.8289 (Domestic) / +1.201.689.8341 (International) For those unable to listen to the live call, a recording of the webcast will be available on About Maximus As a leading strategic partner to government, Maximus helps improve the delivery of public services amid complex technology, health, economic, environmental, and social challenges. With a deep understanding of program service delivery, acute insights that achieve operational excellence, and an extensive awareness of the needs of the people being served, our employees advance the critical missions of our partners. Maximus delivers innovative business process management, impactful consulting services, and technology solutions that provide improved outcomes for the public and higher levels of productivity and efficiency of government-sponsored programs. For more information, visit Non-GAAP Measures and Forward-Looking Statements This release contains non-GAAP measures and other indicators, including organic growth, free cash flow, operating income and EPS adjusted for amortization of intangible assets and divestiture-related charges, adjusted EBITDA, consolidated EBITDA (as defined by our Credit Agreement) and other non-GAAP measures. A description of these non-GAAP measures and details as to how they are calculated are included with our earnings presentation and forthcoming Form 10-Q. The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, operating income, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies. Statements that are not historical facts, including statements about our confidence and strategies, and our guidance and expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand, or acceptance of our products are forward-looking statements that involve risks and uncertainties. These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. The guidance is only effective as of the date given. We undertake no obligation to update the guidance herein as circumstances evolve. A Special Note Regarding Forward-Looking Statements is included within our forthcoming Form 10-Q and a summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2024, which was filed with the Securities and Exchange Commission (SEC) on November 21, 2024, as supplemented by the risk factor set forth in Part II, Item 1A "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which was filed with the SEC on May 8, 2025. Our SEC reports are accessible on Maximus, Inc. Consolidated Balance Sheets September 30, 2024 (unaudited) (in thousands) Assets: Cash and cash equivalents $ 59,777 $ 183,123 Accounts receivable, net 1,422,350 879,514 Income taxes receivable 5,661 5,282 Prepaid expenses and other current assets 117,243 132,625 Total current assets 1,605,031 1,200,544 Property and equipment, net 34,536 38,977 Capitalized software, net 217,433 187,677 Operating lease right-of-use assets 115,437 133,594 Goodwill 1,782,836 1,782,871 Intangible assets, net 561,566 630,569 Deferred contract costs, net 60,392 59,432 Deferred compensation plan assets 58,714 55,913 Deferred income taxes 11,059 14,801 Other assets 15,289 27,130 Total assets $ 4,462,293 $ 4,131,508 Liabilities and Shareholders' Equity: Liabilities: Accounts payable and accrued liabilities $ 281,994 $ 303,321 Accrued compensation and benefits 164,194 237,121 Deferred revenue, current portion 70,197 83,238 Income taxes payable 31,310 26,535 Long-term debt, current portion 48,263 40,139 Operating lease liabilities, current portion 39,882 47,656 Other current liabilities 70,311 69,519 Total current liabilities 706,151 807,529 Deferred revenue, non-current portion 48,990 45,077 Deferred income taxes 161,426 169,118 Long-term debt, non-current portion 1,608,982 1,091,954 Deferred compensation plan liabilities, non-current portion 58,736 57,599 Operating lease liabilities, non-current portion 83,390 97,221 Other liabilities 21,582 20,195 Total liabilities 2,689,257 2,288,693 Shareholders' equity: Common stock, no par value; 100,000 shares authorized; 56,350 and 60,352 shares issued and outstanding as of June 30, 2025, and September 30, 2024, respectively 627,496 598,304 Accumulated other comprehensive loss (12,629 ) (32,460 ) Retained earnings 1,158,169 1,276,971 Total shareholders' equity 1,773,036 1,842,815 Total liabilities and shareholders' equity $ 4,462,293 $ 4,131,508 Expand Maximus, Inc. Consolidated Statements of Cash Flows (Unaudited) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (in thousands) Cash flows from operating activities: Net income $ 105,981 $ 89,752 $ 243,746 $ 234,410 Adjustments to reconcile net income to cash flows from operations: Depreciation and amortization of property, equipment, and capitalized software 9,607 7,530 27,502 24,146 Amortization of intangible assets 23,010 23,542 69,041 68,532 Amortization of debt issuance costs and debt discount 736 1,697 2,046 2,899 Deferred income taxes (5,239 ) 4,545 (5,829 ) (3,770 ) Stock compensation expense 10,749 9,481 30,324 27,605 Divestiture-related charges — — 39,343 1,018 Change in assets and liabilities, net of effects of business combinations and divestitures: Accounts receivable (318,415 ) 65,857 (553,297 ) (26,528 ) Prepaid expenses and other current assets 1,398 (616 ) 9,341 19,316 Deferred contract costs 1,059 (4,777 ) (856 ) (8,377 ) Accounts payable and accrued liabilities (27,751 ) 4,642 (21,808 ) (1,659 ) Accrued compensation and benefits (2,368 ) (10,487 ) (50,369 ) (21,043 ) Deferred revenue 2,618 7,374 (8,675 ) 18,079 Income taxes 12,090 (2,734 ) 5,625 10,576 Operating lease right-of-use assets and liabilities (1,145 ) (1,746 ) (3,508 ) (2,131 ) Other assets and liabilities 4,952 5,268 (2,626 ) 8,351 Net cash (used in)/provided by operating activities (182,718 ) 199,328 (220,000 ) 351,424 Cash flows from investing activities: Purchases of property and equipment and capitalized software (15,488 ) (34,690 ) (55,686 ) (82,237 ) Asset acquisition — — — (18,006 ) Proceeds from divestitures — — 736 3,078 Other — — (2,165 ) — Net cash used in investing activities (15,488 ) (34,690 ) (57,115 ) (97,165 ) Cash flows from financing activities: Cash dividends paid to Maximus shareholders (16,904 ) (18,239 ) (51,865 ) (54,847 ) Purchases of Maximus common stock — (47,275 ) (306,443 ) (47,275 ) Tax withholding related to RSU vesting (10 ) — (16,451 ) (13,455 ) Payments for contingent consideration — (2,809 ) — (10,977 ) Payments for debt financing costs — (9,724 ) (1,658 ) (9,724 ) Proceeds from borrowings 376,208 426,757 1,335,208 850,166 Principal payments for debt (212,535 ) (488,038 ) (810,174 ) (952,825 ) Other (643 ) 3,996 (1,824 ) 9,118 Net cash provided by/(used in) financing activities 146,116 (135,332 ) 146,793 (229,819 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 1,528 155 (65 ) 1,270 Net change in cash, cash equivalents, and restricted cash (50,562 ) 29,461 (130,387 ) 25,710 Cash, cash equivalents, and restricted cash, beginning of period 155,938 118,340 235,763 122,091 Expand Maximus, Inc. Consolidated Results of Operations by Segment (Unaudited) For the Three Months Ended For the Nine Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (dollars in thousands) Revenue: U.S. Federal Services $ 761,174 $ 683,347 $ 2,319,756 $ 2,062,127 U.S. Services 439,818 472,298 1,334,418 1,448,258 Outside the U.S. 147,408 159,284 458,687 479,942 Revenue $ 1,348,400 $ 1,314,929 $ 4,112,861 $ 3,990,327 Gross profit: U.S. Federal Services $ 226,134 29.7 % $ 186,075 27.2 % $ 601,507 25.9 % $ 506,074 24.5 % U.S. Services 105,932 24.1 % 121,012 25.6 % 312,706 23.4 % 369,497 25.5 % Outside the U.S. 27,447 18.6 % 25,227 15.8 % 85,678 18.7 % 74,386 15.5 % Gross profit $ 359,513 26.7 % $ 332,314 25.3 % $ 999,891 24.3 % $ 949,957 23.8 % Selling, general, and administrative expenses: U.S. Federal Services $ 88,272 11.6 % $ 79,949 11.7 % $ 245,563 10.6 % $ 247,671 12.0 % U.S. Services 60,975 13.9 % 59,531 12.6 % 173,096 13.0 % 174,032 12.0 % Outside the U.S. 21,507 14.6 % 26,647 16.7 % 66,822 14.6 % 75,249 15.7 % Divestiture-related charges (2) — NM — NM 39,343 NM 1,018 NM Other (3) 77 NM 906 NM 599 NM 6,712 NM Selling, general, and administrative expenses $ 170,831 12.7 % $ 167,033 12.7 % $ 525,423 12.8 % $ 504,682 12.6 % Operating income: U.S. Federal Services $ 137,862 18.1 % $ 106,126 15.5 % $ 355,944 15.3 % $ 258,403 12.5 % U.S. Services 44,957 10.2 % 61,481 13.0 % 139,610 10.5 % 195,465 13.5 % Outside the U.S. 5,940 4.0 % (1,420 ) (0.9 )% 18,856 4.1 % (863 ) (0.2 )% Amortization of intangible assets (23,010 ) NM (23,542 ) NM (69,041 ) NM (68,532 ) NM Divestiture-related charges (2) — NM — NM (39,343 ) NM (1,018 ) NM Other (3) (77 ) NM (906 ) NM (599 ) NM (6,712 ) NM Operating income $ 165,672 12.3 % $ 141,739 10.8 % $ 405,427 9.9 % $ 376,743 9.4 % Expand (1) Percentage of respective revenue, as applicable. Percentages not considered meaningful are marked "NM." (2) During fiscal years 2025 and 2024, we have divested businesses from our Outside the U.S. Segment. (3) Other expenses includes credits and costs that are not allocated to a particular segment. Expand Maximus, Inc. Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share (Unaudited) For the Three Months Ended For the Nine Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (dollars in thousands, except per share data) Operating income $ 165,672 $ 141,739 $ 405,427 $ 376,743 Add back: Amortization of intangible assets 23,010 23,542 69,041 68,532 Add back: Divestiture-related charges — — 39,343 1,018 Add back: Depreciation and amortization of property, equipment, and capitalized software 9,607 7,530 27,502 24,146 Adjusted EBITDA (Non-GAAP) $ 198,289 $ 172,811 $ 541,313 $ 470,439 Adjusted EBITDA margin (Non-GAAP) 14.7 % 13.1 % 13.2 % 11.8 % Net income $ 105,981 $ 89,752 $ 243,746 $ 234,410 Add back: Amortization of intangible assets, net of tax 16,958 17,350 50,883 50,508 Add back: Divestiture-related charges — — 39,343 1,018 Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 122,939 $ 107,102 $ 333,972 $ 285,936 Diluted earnings per share $ 1.86 $ 1.46 $ 4.20 $ 3.81 Add back: Effect of amortization of intangible assets on diluted earnings per share 0.30 0.28 0.88 0.82 Add back: Effect of divestiture-related charges on diluted earnings per share — — 0.67 0.02 Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 2.16 $ 1.74 $ 5.75 $ 4.65 Expand
Business Wire
10 minutes ago
- Business Wire
NeueHealth Reports Second Quarter 2025 Results
DORAL, Fla.--(BUSINESS WIRE)--NeueHealth, Inc. ('NeueHealth' or the 'Company') (NYSE: NEUE), the value-driven healthcare company, today reported financial results for its second quarter ended June 30, 2025. 'We are pleased to report another strong quarter of financial results as we continue to build on the momentum we have established across our business this year,' said Mike Mikan, President and CEO of NeueHealth. 'We delivered our sixth consecutive quarter of Adjusted EBITDA profitability, and we are continuing to see strong performance across product categories, including the ACA Marketplace, Medicare, and Medicaid. In the second quarter and beyond, we are focused on advancing our end-to-end, value-based care enablement platform that will power the future of our company, supporting clinical, financial, and administrative functions to create a more aligned and coordinated care experience for all.' Key Metrics Three Months Ended Six Months Ended ($ in thousands) June 30, June 30, 2025 2024 2025 2024 Financial Metrics Revenue $ 209,082 $ 225,991 $ 424,869 $ 471,086 Net Loss $ (1,548 ) $ (57,698 ) $ (12,396 ) $ (61,875 ) Net Income (Loss) from Continuing Operations $ 6,838 $ (39,259 ) $ 5,400 $ (33,571 ) Adjusted EBITDA (non-GAAP) $ 19,020 $ 3,962 $ 32,499 $ 7,618 Expand See the table at the end of this release for additional information and a reconciliation of the non-GAAP measures used in the table above. See table at the end of this release for more detail. Earnings Conference Call As previously announced, NeueHealth will discuss the Company's results, strategy, and outlook on a conference call with investors at 8:00 a.m. Eastern Time today. NeueHealth will host a live webcast of this conference call which can be accessed from the Investor Relations page of the Company's website ( Following the call, a webcast replay will be available on the same site. This earnings release and the Form 8-K filed August 7, 2025 can be accessed on the Investor Relations page of the Company's website. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website. Accordingly, investors should monitor this portion of our website, in addition to following our press releases, U.S. Securities and Exchange Commission ('SEC') filings and public conference calls and webcasts. About NeueHealth NeueHealth is a value-driven healthcare company grounded in the belief that all health consumers are entitled to high-quality, coordinated care. By uniquely aligning the interests of health consumers, providers, and payors, NeueHealth helps to make healthcare accessible and affordable to all populations across the ACA Marketplace, Medicare, and Medicaid. NeueHealth delivers high-quality clinical care to over 600,000 health consumers through owned clinics and unique partnerships with over 3,000 affiliated providers. We also enable independent providers and medical groups to thrive in performance-based arrangements through a suite of technology and services scaled centrally and deployed locally. We believe our value-driven, consumer-centric care model can transform the healthcare experience and maximize value across the healthcare system. For more information, visit: Forward-Looking Statements This release contains certain 'forward-looking statements' within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements made in this release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies, as well as statements regarding timing, completion, and effects of the transaction contemplated by the Agreement and Plan of Merger (the 'Merger Agreement') entered into by the Company with NH Holdings 2025, Inc. ('Parent') on December 23, 2024 pursuant to which, if all applicable conditions are satisfied or waived, the Company will become a wholly owned subsidiary of Parent (the 'Transaction'). Parent is indirectly controlled by private investment funds affiliated with New Enterprise Associates, Inc. ('NEA'). These statements often include words such as 'anticipate,' 'expect,' 'plan,' 'believe,' 'intend,' 'project,' 'forecast,' 'estimates,' 'projections,' 'outlook,' 'ensure,' and other similar expressions. These forward-looking statements include any statements regarding our plans and expectations. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: the failure to complete the Transaction on the anticipated terms and within the anticipated timeframe, including as a result of failure to obtain required stockholder or regulatory approvals or to satisfy other closing conditions; potential litigation relating to the Transaction that could be instituted against NEA, the Company or their respective affiliates, directors, managers, officers or employees, and the effects of any outcomes related thereto; potential adverse reactions or changes to our business relationships or operating results resulting from the announcement, pendency or completion of the Transaction; the risk that our stock price may decline significantly if the Transaction is not consummated; certain restrictions during the pendency of the Transaction that may impact our ability to pursue certain business opportunities or strategic transactions; costs associated with the Transaction, which may be significant; the occurrence of events, changes or other circumstances that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee; our ability to continue as a going concern; expectations and outcomes related to the Merger Agreement; our ability to comply with the terms of our credit facilities or any credit facility into which we enter in the future; our ability to obtain any short or long term debt or equity financing needed to operate our business; our ability to quickly and efficiently complete the wind down of our remaining Individual and Family Plan ('IFP') businesses and MA businesses outside of California, including by satisfying liabilities of those businesses when due and payable; potential disruptions to our business due to the Transaction or corporate restructuring and any resulting headcount reduction; our ability to accurately estimate and effectively manage the costs relating to changes in our business offerings and models; a delay or inability to withdraw regulated capital from our subsidiaries; a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and expand consumer enrollment; our and our care partner's abilities to obtain and accurately assess, code, and report risk adjustment factor scores; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate medical expenses; our ability to obtain claims information timely and accurately; the impact of any pandemic or epidemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; the impact of changes to federal funding for government healthcare programs; our ability to manage any growth of our business; our ability to operate, update or implement our technology platforms and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses and divest businesses as needed; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; our ability to comply with requirements to maintain effective internal controls; the outcome of threatened or pending litigation and risks of future legal disputes; the impacts resulting from new (or change to existing) laws, regulations and executive actions; our ability to mitigate risks associated with our ACO REACH and related businesses, including any unanticipated market or regulatory developments; and the other factors set forth under the heading 'Risk Factors' in the Company's reports on Form 10-K, Form 10-Q, and Form 8-K (including all amendments to those reports) and our other filings with the SEC. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or changes in our expectations. June 30, 2025 2024 Assets Current assets: Cash and cash equivalents $ 131,618 $ 83,295 Short-term investments 13,946 9,871 Accounts receivable, net of allowance of $55 and $27, respectively 53,074 36,594 ACO REACH performance year receivable 321,596 95,075 Current assets of discontinued operations 89,804 173,006 Prepaids and other current assets 29,844 36,807 Total current assets 639,882 434,648 Other assets: Long-term investments — — Property, equipment and capitalized software, net 11,664 11,240 Intangible assets, net 66,088 71,064 Other non-current assets 26,055 27,431 Total other assets 103,807 109,735 Total assets $ 743,689 $ 544,383 Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders' Equity (Deficit) Current liabilities: Medical costs payable $ 97,837 $ 124,360 Accounts payable 5,317 6,298 Short-term borrowings 1,000 2,000 ACO REACH performance year obligation 248,465 — Current liabilities of discontinued operations 333,799 344,651 Risk share payable to deconsolidated entity 123,981 123,981 Warrant liability 27,651 29,738 Other current liabilities 70,362 79,200 Total current liabilities 908,412 710,228 Long-term borrowings 212,433 202,614 Other liabilities 15,899 17,649 Total liabilities 1,136,744 930,491 Commitments and contingencies Redeemable noncontrolling interests 55,729 48,580 Redeemable Series A preferred stock, 0.0001 par value; 750,000 shares authorized in 2025 and 2024; 750,000 shares issued and outstanding in 2025 and 2024 747,481 747,481 Redeemable Series B preferred stock, 0.0001 par value; 175,000 shares authorized in 2025 and 2024; 175,000 shares issued and outstanding in 2025 and 2024 172,936 172,936 Shareholders' equity (deficit): Common stock, 0.0001 par value; 3,000,000,000 shares authorized in 2025 and 2024; 9,024,240 and 8,320,959 shares issued and outstanding in 2025 and 2024, respectively 1 1 Additional paid-in capital 3,107,121 3,099,423 Accumulated deficit (4,464,323 ) (4,442,529 ) Accumulated other comprehensive loss — — Treasury stock, at cost, 31,526 shares at December 31, 2025 and 2024 (12,000 ) (12,000 ) Total shareholders' equity (deficit) (1,369,201 ) (1,355,105 ) Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders' equity (deficit) $ 743,689 $ 544,383 Expand NeueHealth, Inc. and Subsidiaries Consolidated Statements of Income (Loss) (in thousands, except share and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, Revenue: Capitated revenue $ 82,532 $ 64,005 $ 163,519 $ 125,471 ACO REACH revenue 115,339 149,802 239,379 321,613 Service revenue 10,420 12,076 20,254 23,691 Investment income 791 108 1,717 311 Total revenue 209,082 225,991 424,869 471,086 Operating expenses: Medical costs 146,410 177,681 307,304 374,555 Operating costs 44,860 70,470 93,533 137,231 Intangible assets impairment — 11,411 — 11,411 Depreciation and amortization 3,555 3,978 7,114 8,540 Total operating expenses 194,825 263,540 407,951 531,737 Operating income (loss) 14,257 (37,549 ) 16,918 (60,651 ) Interest expense 6,878 4,110 13,515 7,040 Warrant expense (income) 562 (2,213 ) (2,087 ) (4,285 ) Gain on troubled debt restructuring — — — (30,311 ) Income (Loss) from continuing operations before income taxes 6,817 (39,446 ) 5,490 (33,095 ) Income tax (benefit) expense (21 ) (187 ) 90 476 Net income (loss) from continuing operations 6,838 (39,259 ) 5,400 (33,571 ) Loss from discontinued operations, net of tax (8,386 ) (18,439 ) (17,796 ) (28,304 ) Net Loss (1,548 ) (57,698 ) (12,396 ) (61,875 ) Net income from continuing operations attributable to noncontrolling interests (8,507 ) (932 ) (9,398 ) (12,669 ) Series A preferred stock dividend accrued (10,981 ) (10,422 ) (21,710 ) (20,716 ) Series B preferred stock dividend accrued (2,465 ) (2,338 ) (4,872 ) (4,648 ) Net loss attributable to NeueHealth, Inc. common shareholders $ (23,501 ) $ (71,390 ) $ (48,376 ) $ (99,908 ) Basic and loss income per share attributable to NeueHealth, Inc. common shareholders Continuing operations $ (1.68 ) $ (6.42 ) $ (3.49 ) $ (8.77 ) Discontinued operations (0.94 ) (2.23 ) (2.04 ) (3.46 ) Basic and diluted loss per share (2.62 ) (8.65 ) (5.53 ) (12.23 ) Basic and diluted weighted-average common shares outstanding 8,978 8,253 8,750 8,166 Expand NeueHealth, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (Unaudited) Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ (12,396 ) $ (61,875 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 7,114 8,540 Impairment of intangible assets — 11,411 Share-based compensation 7,497 37,407 Payment-In-Kind ('PIK') Interest 8,952 — Gain on troubled debt restructuring — (30,311 ) Net accretion of investments (202 ) (72 ) Loss on disposal of property, equipment, and capitalized software 87 595 Other, net 1,029 (469 ) Changes in assets and liabilities, net of acquired assets and liabilities: Accounts receivable (16,480 ) (4,872 ) ACO REACH performance year receivable (226,521 ) (309,639 ) Other assets 9,567 (7,889 ) Medical cost payable (31,421 ) (35,998 ) Risk adjustment payable (4,996 ) (4,155 ) Accounts payable and other liabilities (12,483 ) (14,387 ) Unearned revenue — (11 ) Warrant liability (2,087 ) 8,978 ACO REACH performance year obligation 248,465 325,599 Net cash used in operating activities (23,875 ) (77,148 ) Cash flows from investing activities: Purchases of investments (8,224 ) (9,544 ) Proceeds from sales, paydown, and maturities of investments 4,388 2,581 Purchases of property and equipment (2,653 ) (877 ) Proceeds from sale of business, net 61,139 197,121 Net cash provided by investing activities 54,650 189,281 Cash flows from financing activities: Proceeds from long-term borrowings — 52,411 Repayments of short-term borrowings (1,000 ) (273,636 ) Distributions to noncontrolling interest holders (2,249 ) (4,730 ) Net cash used in financing activities (3,249 ) (225,955 ) Net increase (decrease) in cash and cash equivalents 27,526 (113,822 ) Cash and cash equivalents – beginning of year $ 185,405 $ 375,280 Cash and cash equivalents – end of period $ 212,931 $ 261,458 Expand NeueHealth, Inc. and Subsidiaries Segment Information (in thousands) (Unaudited) NeueCare ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, Statement of income (loss) and operating data: 2025 2024 2025 2024 Revenue: Capitated revenue $ 81,407 $ 64,005 $ 162,394 $ 125,471 Service revenue 6,874 9,803 13,138 19,333 Investment income 120 21 477 21 Total unaffiliated revenue 88,401 73,829 176,009 144,825 Affiliated revenue 3,227 3,156 6,136 5,783 Total segment revenue 91,628 76,985 182,145 150,608 Operating expenses Medical Costs 36,723 33,579 74,241 61,015 Operating Costs 28,936 34,676 56,146 67,265 Intangible assets impairment — 11,411 — 11,411 Depreciation and amortization 2,757 3,221 5,539 7,007 Total operating expenses 68,416 82,887 135,926 146,698 Operating income (loss) $ 23,212 $ (5,902 ) $ 46,219 $ 3,910 Expand Non-GAAP Financial Measures We use the non-GAAP financial measures Adjusted EBITDA and Adjusted Operating Cost Ratio. We define Adjusted EBITDA as Net Loss excluding loss from discontinued operations, interest expense, income taxes, depreciation and amortization, transaction costs, share-based and other long-term compensation expense, impact of troubled debt restructuring, restructuring and contract termination costs, impairment of goodwill and long-lived assets, losses related to the bankruptcy of one of our ACO REACH partners, impact of classifying certain of our operations as held-for-sale, and changes in the fair value of derivatives. We define Adjusted Operating Cost Ratio as Operating Cost Ratio excluding share-based compensation expense. These non-GAAP measures have been presented in this quarterly Earnings Release or in the earnings conference call and related materials as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding and including items that we do not believe are indicative of our core operating performance. Management believes these measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA and Adjusted Operating Cost Ratio to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to Net Income (Loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow available for management's discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. Adjusted Operating Cost Ratio is not a recognized term under GAAP and should not be considered as an alternative to Operating Cost Ratio as a measure of financial performance or any other performance measure derived in accordance with GAAP. The presentation of Adjusted Operating Cost Ratio has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented: (a) Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to financing initiatives and acquisitions or dispositions. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business. (b) Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on several factors, including the timing, quantity and grant date fair value of the awards. Also includes $0.1 million and $0.2 million of compensation expense that was recognized for the cancellation of P-Unit Awards in relation to our purchase of the minority interest in Centrum for the three and six months ended June 30, 2025. There was no equivalent compensation expense included for the three and six months ended June 30, 2024. (c) Represents the non-cash change in the fair value of the warrant liability established for warrants included in our financing arrangements, which are remeasured at fair value each reporting period. (d) Restructuring and contract termination costs represent severance costs as part of a workforce reduction, amounts paid for early termination of leases, and impairment of certain long-lived assets primarily relating to our decision to exit the Commercial business for the 2023 plan year. (e) Beginning in the second quarter of 2024, Adjusted EBITDA excludes the impact of our operations classified as held-for-sale that were subsequently sold in November 2024. (f) Represents the costs incurred as a result of one of our ACO REACH care partners filing for bankruptcy; includes the full allowance established for the outstanding receivable and ongoing costs incurred to manage and provide service to members attributed to the care partner that would have otherwise been reimbursed prior to the care partner's bankruptcy. (g) Adjustment has been updated to remove the impact of our held-for-sale operations that are adjusted for in their entirety as described in (e). Expand The following table provides a reconciliation of Adjusted Operating Cost Ratio for the periods presented: (a) Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on several factors, including the timing, quantity and grant date fair value of the awards. Also includes $0.1 million and $0.2 million of compensation expense that was recognized for the cancellation of P-Unit Awards in relation to our purchase of the minority interest in Centrum for the three and six months ended June 30, 2025. There was no equivalent compensation expense included within for the three and six months ended June 30, 2024. (b) Represents the impact of revenue and operating costs related to our operations classified as held-for-sale beginning in the second quarter of 2024. The sale was completed in November 2024. (c) Transaction related costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to financing initiatives and acquisitions or dispositions. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business. Expand
Yahoo
39 minutes ago
- Yahoo
Analysis-Struggling US healthcare stocks endure rough 2025 but draw some bargain hunters
By Lewis Krauskopf NEW YORK (Reuters) -Woes for U.S. healthcare stocks have worsened this year driven partly by Trump administration policies, although some investors are betting that the beaten-down shares are now becoming too much of a bargain to pass up. The S&P 500 healthcare sector -- which includes pharmaceutical companies, biotechs, health insurers and medical equipment makers -- has slumped 5% in 2025, lagging the over 7% gain for the overall index. Pressure to bring down U.S. prescription drug prices to overseas rates, tariffs targeted at pharmaceuticals and cuts to areas such as health research funding and Medicaid are among the Trump administration actions clouding the outlook for the shares this year, investors said. Regulatory obstacles are compounding issues, including expiring drug patents and setbacks for bellwethers including UnitedHealth Group. "You have got this constant overarching political and regulatory overhang that doesn't really seem to subside with any administration," said Jared Holz, healthcare sector strategist at Mizuho Securities. "When you have so much nebulousness around the sector, it turns people off rather than invites them to the party." In another sign of the group losing favor, healthcare exchange-traded-funds have seen 12 consecutive months of net outflows as of July for a total outflow of $11.5 billion in that time, more than for any other sector, according to State Street Investment Management. The performance picture is even dimmer over a longer period. While shares of massive technology companies pushed the benchmark S&P 500 up over 50% the past three years, the healthcare sector is little changed in that time. That gap has put the 60-stock sector at nearly its biggest discount to the broader market in 30 years, which some investors hope is an inflection point for the battered group. "The valuation is extremely cheap and the relative performance is at an extreme," said Walter Todd, chief investment officer at Greenwood Capital, whose healthcare holdings include diversified giant Johnson & Johnson and medical device maker Stryker. "So at this point, it seems like a pretty decent setup to get some outperformance." The price-to-earnings ratio for the healthcare sector, based on earnings estimates for the next year, has fallen to 16.2 times from nearly 20 a year ago, according to LSEG Datastream. Meanwhile, the S&P 500's rally to records has driven the index's P/E ratio to over 22 times -- giving the broader market a significant premium over the healthcare sector. 'BAD NEWS IS PRICED IN' Some high-profile healthcare names are at even cheaper valuations. For example, Merck is trading at a forward P/E of 8.7, against its long-term average of 14.5, while fellow drugmaker Bristol Myers Squibb trades at 7.4 against its average of 15.8, according to LSEG. Year-to-date, shares of both Merck and Bristol Myers are down roughly 20%. The group is drawing bets from some value investors such as Patrick Kaser, portfolio manager at Brandywine Global, whose portfolio is overweight the sector including owning shares of CVS Health and European drugmakers GSK and Sanofi. "Our perspective is a lot of this bad news is priced in and then some," Kaser said. "To bet against the sector from here, you're essentially continuing to bet on the valuation gap, which is already large, continuing to widen." The group's decline means the total market value of the S&P 500 healthcare sector is about $4.8 trillion, not much higher than the $4.3 trillion value of Nvidia, the semiconductor company that has symbolized the artificial intelligence boom. Indeed, some investors said a shift in capital away from Nvidia and other massive tech companies could spark healthcare shares. Such a move appeared to occur in the first quarter, investors said, when the healthcare sector rose 6% while declines in tech and megacap stocks dragged indexes lower. Fears of an economic downturn also could help healthcare shares, at least on a relative basis. The group is often viewed as a defensive area in rockier economic times. Economic fears flared following last Friday's weaker-than-expected employment report, while some strategists say the market could be due for a pullback after surging over 20% since its April lows. "During the first quarter, healthcare did great even as tech rolled over, as the fears of an economic slowdown got to more economically sensitive stocks," said Chris Grisanti, chief market strategist at MAI Capital Management, adding he expects healthcare "will perform better in a more difficult market." More clarity on regulatory issues, including tariffs, also could support healthcare, investors said. But some value investors are hesitant to dive into the group. Michael Mullaney, director of global markets research at Boston Partners, said he is wary some healthcare shares could be "value traps," preferring to overweight areas including industrials or financials. "There's been just so much of an overhang in the sector," Mullaney said. "There are better places to go with cleaner stories." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
