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.
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