Latest news with #Hemsley
Yahoo
4 hours ago
- Business
- Yahoo
UnitedHealth signals prolonged pain with new, far lower profit forecast, shares fall
By Sriparna Roy and Sneha S K (Reuters) -UnitedHealth Group provided a full-year profit forecast on Tuesday after suspending its prior outlook in May, revealing billions of additional costs the company will face in the upcoming quarters. The health insurer projected full-year adjusted earnings per share of at least $16, well short of analysts' already diminished estimates, while second-quarter profit also missed Wall Street expectations. "While the $16 EPS floor was lower than expected, it does give investors/analysts a base to model off of, and potentially sets up UNH to return to the 'beat and raise' cadence that its investors had become accustomed to," said James Harlow, senior vice president at Novare Capital Management. Company executives attributed the shortfall to higher medical costs than it had expected and other poor planning. It now sees medical costs for the year coming in $6.5 billion higher than initially projected. "We significantly underestimated the accelerating medical trend and did not modify benefits or plan offerings sufficiently to offset the pressures we are now experiencing," said Tim Noel, the new CEO of the company's UnitedHealthcare health insurance unit. UnitedHealth shares were down nearly 5% on Tuesday. They have fallen more than 40% this year. UnitedHealth and other insurers have been hit hard this year by elevated medical costs. The company's underperformance led to the abrupt departure of CEO Andrew Witty in May. Stephen Hemsley, who returned as chief executive, is under pressure to regain investor trust as the company faces financial struggles and reputational damage that surfaced after the then-CEO of its health insurance unit was gunned down on a New York City street in December. "This is a challenging year for our enterprise. But I feel strongly we can overcome these challenges, as we have done before," Hemsley said in a call to discuss the results and forecast. Underperformance of its Optum pharmacy benefit manager, which also provides financial consultation and other services, added to issues the company must address. Optum's quarterly revenue fell 7%, hurt by legacy customer contract revisions. The company said the unit's 2025 profit will be $6.6 billion below its own expectations. "There are areas that we have under-invested, and they include areas of Optum insight," Hemsley said, adding that there was a need for stable leadership and a product offerings upgrade. The company in December had forecast 2025 adjusted profit of $29.50 to $30.00 per share before pulling that, nearly double its new view. UnitedHealth posted an adjusted profit of $27.66 per share in 2024. Medical cost trends in its Medicare Advantage plans for older adults are now expected to run at about 7.5% in 2025, exceeding prior company expectations of just over 5%. The company anticipates these trends to continue to accelerate to nearly 10% next year. UnitedHealth has a strong balance sheet, which will likely help the company to repair its problems, said Bill Smead, chief investment officer at Smead Capital Management. UnitedHealth's adjusted second-quarter profit of $4.08 per share missed analysts' estimates by 40 cents. 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
Yahoo
a day ago
- Business
- Yahoo
UnitedHealth investors may seek roadmap on costs as Hemsley takes center stage
By Sriparna Roy (Reuters) -UnitedHealth's newly returned CEO, Stephen Hemsley, will likely face investor scrutiny over the largest U.S. health insurance and services company's efforts to rein in the elevated medical costs behind the withdrawal of its annual forecast. Hemsley returned to the role in May following the abrupt departure of then-CEO Andrew Witty, who stepped down amid rising operational and financial pressures. The company's decision in May to withdraw its 2025 earnings forecast due to soaring medical costs and Medicare-related challenges sent its shares tumbling. So far this year, UnitedHealth's stock has plunged more than 40%, dragging down the broader managed care sector with it. "Investors will be looking for confidence that he (Hemsley) has got a handle on things and that he understands where things may have gone wrong and how they are going to correct it," said James Harlow, senior vice president at Novare Capital Management, which owns 46,333 shares of the healthcare company. Hemsley, who ran the company from 2006 to 2017, has promised to rebuild trust, telling shareholders last month that regaining their confidence is a top priority. The pressure is compounded by a federal investigation into UnitedHealth's Medicare billing practices. The company recently confirmed it was cooperating with both criminal and civil inquiries from the U.S. Department of Justice. These regulatory woes have only added to the uncertainty facing the insurer. Wall Street analysts have lowered expectations throughout this month. Analysts expect a profit of $4.48 per share for the second quarter, according to data compiled by LSEG. That compares with expectations of $5.70 per share in May, when the company suspended its annual profit forecast. UnitedHealth plans to establish "a prudent 2025 earnings outlook and offer initial perspectives for 2026," the company had said in June. "Ultimately, on Tuesday, what we'd expect is more clarity on the way would expect a strategy, a roadmap laid out," said Sahil Bhatia, managing director of life sciences at Manning & Napier. "I think one of the big issues over the last few months has been just the we would expect more consistent execution going forward after laying out that roadmap," Bhatia said. At least two investors said they anticipate UnitedHealth will reset its 2025 profit forecast in the range of $18 to $20 per share, far below the company's previous outlook of $26 to $26.50. This might be conservative but is an appropriate start for Hemsley's first call, said Jeff Jonas, portfolio manager at Gabelli Funds. UnitedHealth has previously built a reputation to guide conservatively and raise its outlook as the year progresses. But this time, investors warn, withholding guidance altogether would be damaging. "If they continue to not give an EPS outlook for 2025, that will be damaging," Harlow added. Apart from financial turbulence, the company has also faced reputational challenges. It has moved to ease prior authorization requirements after a public outcry following the killing of a UnitedHealth executive last December. The Optum unit, once a growth driver for UnitedHealth, has also emerged as a key area of concern. Last quarter, the company flagged "unanticipated changes" in its Optum business that impacted planned 2025 reimbursements. "Among all the overhangs, Optum Health remains the biggest concern," said Deutsche Bank analyst George Hill. UnitedHealth has also grappled with the fallout from a major cyberattack last year that disrupted claims processing across its Change Healthcare unit.
CNBC
2 days ago
- Business
- CNBC
UnitedHealth aims to reassure investors as profits plunge, DOJ investigates its Medicare business
UnitedHealth Group Chairman and CEO Stephen Hemsley will face the first real test Tuesday of his ability to regain investor confidence as the largest private U.S. insurer reports earnings. The Dow component has seen its share price cut nearly in half since mid-May, with the stock on pace for its worst year in more than a decade, after earnings in its flagship Medicare program and Optum Health physician practices plummeted. That led to the abrupt resignation of former CEO Andrew Witty, forcing the company to reinstate ex-CEO Hemsley to replace him and suspend earnings guidance. On top of that, the company is facing criminal and civil Department of Justice investigations into its Medicare billing practices. As UnitedHealth faces challenges on multiple fronts, it sits in a "perfect storm," said Mizuho Securities analyst Ann Hynes. Now, investors want to know how Hemsley plans to steer the company out of the whirlwind, after assuring them last June that "we're humbly determined to earn back your trust and your confidence." Here are three key things investors will be looking for from the company's earnings report. More so than the second-quarter numbers, analysts are focused on UnitedHealth's outlook for the full year. Hemsley told investors the company would provide an update on 2025 earnings guidance, after it suspended its forecast in May. Analysts expect UnitedHealth to post adjusted full-year earnings of $21.26 per share, according to consensus estimates from LSEG. Estimates range from a low of $18 per share to a peak of $26.44 a share. "Anything below $18 — that would be viewed as a negative by the street," Hynes said RBC Capital Markets analyst Ben Hendrix has set his estimate above consensus at $23.36, but said Wall Street remains bearish on UnitedHealth. "While we base our more optimistic outlook on management's assertion that Medicare Advantage remains profitable with the 3% low-end of target MA margin in sight for 2026, clients we've spoken to have expressed concern over continued margin compression in OptumHealth and accelerating (medical cost) trend in core Medicare Advantage," he wrote in a note earlier this month. Analysts are also focused on how the company plans to stabilize its physician practice unit, Optum Health. For years, it helped UnitedHealth outperform its peers in its flagship Medicare Advantage program, by leveraging its 90,000 employed or affiliated doctors to treat patients on UnitedHealth's own plans. "Investors with duration were investing in United really for the power of … Optum Health, the power of United steering their own Medicare Advantage members, extracting considerable margin that they hadn't been able to before," said Baird analyst Michael Ha. But in the first quarter this year, Optum Health saw a sharp decline in profits. Analysts said the plunge was due in part to a Biden-era change in Medicare reimbursement standards known as V28, which is making it harder for insurers and doctors to bill for extra services. Mizuho's Hynes said prior billing coding rules left a lot more room for plans to add billing codes related to chronic conditions, such as overall heart conditions, which would provide a higher risk score and reimbursement rate. Under the new V28 rule the billing codes are more specific, closing loopholes that could boost reimbursement. "V28 is very black and white, so you don't have that kind of ability to add codes, and a lot of codes are removed," she said, adding that has now "led to a structural shift in margins for Optum Health." But Ha noted the V28 changes began in 2024, at a time when seniors started utilizing more care. Many of UnitedHealth's Medicare Advantage competitors made adjustments over the last year to address the shift. The sudden collapse of Optum Health margins in the first quarter appears to have caught UnitedHealth off guard. "I think it's an example of misexecution. They knew the headwind heading into the year and even well before then, but for one reason or another couldn't find the offset," Ha said. "We're still confident that Optum Health and United can recover and rebuild unit economics, but we think over the next one to two years, it may potentially worsen." The company got out ahead of the earnings report on Thursday, acknowledging in an SEC filing that its Medicare program billing practices face criminal and civil probes by the Department of Justice. UnitedHealth said the company is cooperating the with the investigations, first reported by the Wall Street Journal. It also noted that in March, a court-appointed special master ruled in the company's favor in a case involving similar allegations brought by the DOJ during the first Trump administration. Hynes believes investor concern over the DOJ probes has been overblown. "The stock is trading like the government's going to kick them out of Medicare and Medicaid, and the likelihood of that is zero, in my view," she said. "It will probably end up with them writing a check and doing a Corporate Integrity Agreement … that's what has happened in the past." But the shooting death of UnitedHealth executive Brian Thompson last December, which prosecutors allege was carried out by a gunman who was motived by insurance denials, unleashed a groundswell of public criticism of health insurers' practices. Former whistleblower Wendell Potter, who has criticized industry practices after a career at Cigna, said the pressure on large insurers like UnitedHealth likely will not cease. Regulatory scrutiny in Congress has increased on both sides of the aisle, as Washington grapples with high health and drug costs in Medicare, Medicaid and other government health programs. "A lot of the members of Congress who are doctors or Republicans, some are pharmacists, and they see firsthand the heavy hand of these companies," said Potter, president of the Center for Health and Democracy. "And so you're seeing interest by Republicans, and I've not seen that before." In June, UnitedHealth announced that it had hired third party auditors to conduct a review of the company's practices in health insurance and pharmacy benefits services, in an effort "to provide our stakeholders transparency and confidence" in the company's business practices. The company told CNBC it will not have many details to offer about that audit during the second-quarter earnings call. It does not expect the review to be completed until the end of the third quarter of this year.
Mint
3 days ago
- Business
- Mint
Is Dubai chocolate the next Pumpkin Spice?
At Crumbl's Utah headquarters, employees are working on a new dessert with a chocolate and pistachio flavor that has set the internet on fire. Enter the Dubai Chocolate Brownie, the cookie maker's attempt to cash in on a trend that has sent food companies racing to catch up. The new offering, with ingredients that have proven to be expensive and sometimes difficult to source, will hit stores in the coming months, Crumbl said. The confection known as Dubai chocolate, legendary across the internet and a recent hit with many Americans, typically involves a shell of rich chocolate filled with pistachio cream and a shredded dough known as kataifi. Like many other recent food fads, it took off after an influencer promoted it on TikTok. Unlike others, it has triggered supply-chain squeezes, shaken up German courts and caused a run on U.K. grocery stores, forcing them to impose purchasing limits. It has also spurred some of the biggest food companies in America to consider whether the Dubai chocolate flavor might endure as a future classic, like a pumpkin spice or salted caramel. The internet's acceleration of flavor trends is forcing brands to become more nimble and adventurous. Grocery stores and restaurants say they're focused on 'social listening"—corporate-speak for keeping a close eye on Instagram. The art, Crumbl's co-founder Sawyer Hemsley says, is distinguishing a true underlying shift in consumer taste from a short-lived trend. 'It's undeniable that the internet has accelerated the pace at which flavor profiles emerge, spread and evolve," Hemsley says. 'We've seen firsthand how what might've once taken years to catch on, can now reach global audiences in a matter of weeks." The global markets for pumpkin spice and matcha, a flavor from the finely ground powder of green tea, are now each valued north of $1 billion, and both flavors exploded thanks to the web. But these were slow burns. Pumpkin spice goes back to the 1930s, when spice maker McCormick released its pumpkin-spice pie mix. The release of 2003's Starbucks Pumpkin Spice Latte accelerated its popularity. Matcha has climbed steadily in the U.S. since a surge in interest around 2015. And not every trend that succeeds on the internet makes it in the long run. A whipped drink made with instant coffee that became an early TikTok star during the pandemic has faded into distant internet memory. Businesses have been laser-focused on gauging what flavors will last. They look for immediate consumer interest, but prolonged demand is important, too. If customers tend to return for more, it's a sign that the fad could be something more. Dubai chocolate goes back to 2021 at Fix Dessert Chocolatier in its namesake city, when the shop's co-founder Sarah Hamouda designed a chocolate bar to satisfy a pregnancy craving. She called it the 'Can't Get Knafeh of It" bar, after a popular Middle Eastern dessert made with kataifi. Somewhere along the way, the world started calling it Dubai chocolate. 'It's funny," Hamouda says. 'We never came up with this nickname ourselves." Two years later, United Arab Emirates influencer Maria Vehera posted a video of herself eating one of the gooey bars on TikTok, garnering millions of views and triggering candy shops around the world to start marketing their own versions. Dubai chocolate has since been going strong, with companies all over the world marketing the flavor in a variety of products including cheesecakes, syrups, coffees, milkshakes and bars of all shapes and sizes. Competitors range from large companies to teams of entrepreneurs like those at Dubai Choclava, a New York startup selling what its founders call 'the Ferrari of Dubai chocolate," made with high-end organic ingredients. Hamouda says she doesn't mind Dubai chocolate-inspired products but does object to bars made to look exactly like hers, with the same packaging. 'Imitation is the sincerest form of flattery, right?" she says. 'But copycats can't re-create the element of nostalgia that's intentionally baked into every layer of every Fix dessert bar." This year, Dubai chocolate has entered the mainstream: large food brands like Crumbl, Trader Joe's, Aldi, Lidl, Shake Shack and Dunkin' Donuts are announcing spinoffs, betting on the pistachio-chocolate-pastry combo as a flavor profile of the future. Chocolate and pistachio has been a mainstay of fine dining for years, Shake Shack executive chef John Karangis says—but never a commercial smash. At Crumbl, executives thought of pistachio as a weak flavor associated with disappointing sales. Shake Shack's limited-run Dubai Chocolate Pistachio Shake in April ran out of stock in hours across the country, and Lidl's U.S. launch of its Dubai-style chocolate bar in June sold out within a day in some stores. For makers, Dubai chocolate has brought with it supply-chain and financial nightmares. Kataifi dough has been hard for some companies to procure. Chocolate is a difficult bet for food companies these days, as weather conditions in West Africa have sent cocoa prices soaring to as much as $10,000 a metric ton this year after hovering below $3,000 a metric ton for years. Demand for pistachios, and their prices, are rising worldwide, according to the Administrative Committee for Pistachios in California. Shake Shack and Crumbl both say they have devoted significant resources to tracking down ingredients. A hiccup for the flavor came this month as the Food and Drug Administration announced a recall of a pistachio and cacao spread sold in World Market stores across the U.S., due to salmonella contamination. In Germany, the candy hit legal turbulence as a candy importer sued grocery chain Aldi Süd, contending that Dubai chocolate must actually come from Dubai. German courts have handed down conflicting verdicts; in June, a court in Cologne ruled against Aldi. Across the U.S., more than a dozen businesses have filed trademark applications for their Dubai chocolate products in recent months. Companies are still trying to understand why the flavor gained so much traction, and what that means for the future. Some people suggest consumers are interested in desserts with a savory element. Others think customers are pleasantly surprised by the crispy texture. At Shake Shack, director of global culinary and product development Jim Frisch suspects that Americans are interested in the idea of Dubai itself. 'You have this exotic place that is known for its grandeur," he says. 'Our guests are very adventurous…they want that global experience of trying new things." Whether or not Dubai chocolate endures to become a classic flavor, the pace of change isn't likely to let up. Lidl recently rolled out what it is betting is the next Dubai chocolate, even though its first Dubai-style chocolate bar only hit shelves in the U.S. last month. 'Angel Hair Chocolate," filled with Turkish cotton candy, raspberry chocolate and creamy pistachio, arrived at Lidl stores in the U.S. on July 18.
Yahoo
09-07-2025
- Business
- Yahoo
UnitedHealth (UNH) PT Trimmed to $385 at UBS
UnitedHealth Group Incorporated (NYSE:UNH) is one of the best high growth stocks. On June 25, UBS reiterated a Buy rating on UNH but trimmed its price target for the stock to $385 from $400. The revised price target follows statements made by UnitedHealth's reinstated CEO during the company's annual meeting on June 2, wherein he confirmed that updated 2025 guidance will be issued alongside the Q2 earnings report scheduled for July 29. Despite the adjustment, UnitedHealth, boasting a market capitalization of $273.56 billion, continues to demonstrate robust financial performance, with an 8.06% year-over-year revenue growth. UBS noted that CEO Hemsley's use of the word 'prudent' to describe the upcoming outlook made analysts think the company might lower its earnings guidance from the earlier estimate of $22.50 per share. As more investors now expect earnings to be closer to $20 per share for 2025, UBS has adjusted its own forecast to match this new expectation. A senior healthcare professional giving advice to a patient in a clinic. UBS also lowered its profit expectations for Medicare Advantage, cutting the expected margin by 0.5% to 1.5%. The firm also reduced its forecast for Optum Health's profit margin from 5% to 4.5%, showing a more cautious view of how well the business will perform in the near future. UnitedHealth Group Incorporated (NYSE:UNH) delivers health benefit plans, clinical care and management, data analytics, and pharmacy solutions to a broad range of stakeholders, including individuals, employers, government entities, and healthcare providers. While we acknowledge the potential of UNH as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure. None.
