Latest news with #UHG
Yahoo
4 hours ago
- Business
- Yahoo
United Homes Stock Slips Post Q2 Earnings Despite Higher Margins
Shares of United Homes Group, Inc. UHG have lost 0.5% since the company reported its earnings for the quarter ended June 30, 2024, underperforming the S&P 500 Index's 0.5% gain over the same period. Over the past month, however, UHG shares have surged 37.1%, far outpacing the S&P 500's 2.1% growth. UHG's Financial Performance Snapshot For the second quarter of 2025, UHG posted revenues of $105.5 million, down 3.6% from $109.4 million in the prior-year period, reflecting a 10.1% decline in home closings to 303 units from 337. The average sales price rose 2.3% to $349,000 from $341,000, partially offsetting volume weakness. Gross margin improved 100 basis points year over year to 18.9% from 17.9%, aided by cost efficiencies and higher-margin redesigned floor plans. Adjusted gross margin in second-quarter 2025 increased to 21.3% from 20.9%. However, United Homes incurred a net loss of $6.3 million, or $0.11 per share, against a net income of $28.6 million, or $0.50 per share, a year earlier, primarily due to a $6.2 million non-cash fair value adjustment related to contingent earn-out liabilities. Adjusted EBITDA came in at $7.2 million, down 5.5% from $7.7 million in the year-ago quarter, with an adjusted EBITDA margin of 6.9%. United Homes' Other Key Business Metrics Net new orders for the quarter fell 5.9% year over year to 304 homes from 323, with declines in most markets except the Upstate and Rosewood regions, where net new orders grew 26% and 78%, respectively. Raleigh saw a 20% drop in net new orders, though closings in the market increased 13%. Segmental closings also varied — Rosewood saw a 100% increase in closings, while Midlands and Upstate closings dropped 17% and 14%, respectively. Backlog as of June 30, 2025, stood at 202 homes valued at approximately $74.9 million compared with 248 valued at approximately $85.7 million a year earlier. Available liquidity totaled $95.2 million as of June 30, 2025, including $36.5 million in cash and $58.7 million in unused credit capacity. United Homes Group, Inc. Price, Consensus and EPS Surprise United Homes Group, Inc. price-consensus-eps-surprise-chart | United Homes Group, Inc. Quote UHG's Management Commentary CEO Jack Micenko highlighted the continued positive impact of United Homes' refreshed product initiative, which has not only boosted sales pace but also enhanced profitability, with refreshed home gross margins trending about 300 basis points above legacy designs. The company also maintained a focus on affordability, pricing its homes significantly below the U.S. median and average new home prices. CFO Keith Feldman emphasized the 270-basis-point sequential improvement in gross margin, attributing it to product mix and cost-saving measures. Factors Influencing United Homes' Headline Numbers Revenue decline stemmed from lower unit volumes, driven partly by a 10.1% drop in average community count and market conditions marked by high mortgage rates and affordability challenges. The average sales price increase and gross margin expansion were supported by the rollout of redesigned floor plans and direct construction cost savings from United Homes' rebidding initiative. Operating expenses, while slightly lower in dollar terms year over year, remained elevated as a percentage of revenue due to reduced top-line performance. UHG's Guidance While no formal numeric guidance was issued, management expressed confidence in further margin gains in 2025 compared to 2024, citing ongoing product enhancements, new community openings in the second half of the year and disciplined land acquisition strategies. United Homes' Other Developments On May 19, 2025, UHG's board of directors announced the initiation of a strategic review process to explore options including a sale of the company, asset sales or refinancing existing debt to maximize shareholder value. The process remains ongoing, with no definitive outcome or timeline disclosed. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Homes Group, Inc. (UHG): Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Business Wire
5 days ago
- Business
- Business Wire
United Homes Group, Inc. Reports 2025 Second Quarter Results
COLUMBIA, S.C.--(BUSINESS WIRE)--United Homes Group, Inc. (the 'Company') (NASDAQ: UHG) today announced results for the three and six months ended June 30, 2025. Second Quarter 2025 Operating Results For the second quarter 2025, net loss was $6.3 million, or $0.11 per diluted share, which included a loss from the change in fair value of derivative liabilities of $6.2 million, with that change predominantly due to changes in fair value on potential earn-out consideration due to fluctuation in the stock price during the measurement period, representing a non-cash item. The earnout consideration would be paid in common shares upon reaching certain stock price hurdles. The Company is required to record the fair value of this earnout as derivative liabilities on the Condensed Consolidated Balance Sheets and to record changes in fair value of derivative liabilities on the Condensed Consolidated Statements of Operations, in each case until UHG shares reach certain predetermined values or expiration of the five year earnout period. Net income for the second quarter 2024 was $28.6 million, or $0.50 per diluted share, which included income from the change in fair value of derivative liabilities of $32.1 million. Total Stockholders' equity for the second quarter 2025 was $82.2 million. Adjusted book value 1, which excludes the derivative liability and goodwill, was $96.9 million. 'United Homes Group made progress on a number of fronts in the second quarter of 2025,' said Jack Micenko, Chief Executive Officer and President of United Homes Group. 'We continued to reap the benefits of the refreshed product initiative we implemented last year. We also made further strides in our efforts to improve our direct cost efficiency through the systematic rebidding of the materials and labor that go into our homes. We expect these initiatives, as well as several new communities set to be opened, to have a more significant impact on our results as we head into the second half of the year.' Revenue, net of sales discounts, for the second quarter 2025 was $105.5 million, compared to $109.4 million in the second quarter 2024. Home closings during the second quarter 2025 were 303 compared to 337 in the second quarter 2024. Net new home orders during the second quarter 2025 were 304 compared to 323 in the second quarter 2024. ASP of 302 production-built homes (which excludes one percentage of completion home) closed during the second quarter 2025 was approximately $349,000, compared to approximately $341,000 during the second quarter 2024 for 299 production-built homes (which excludes two percentage of completion homes and 36 build to rent homes), representing a 2.5% increase. Gross margin during the second quarter of 2025 was 18.9% compared to 17.9% during the second quarter 2024. Gross margins improved in the second quarter of 2025, driven by closing a healthy mixture of homes featuring redesigned floor plans, direct construction cost savings as a result of the rebid initiative, and less non-recurring expenses compared to the same quarter in 2024. Adjusted gross margin 2 in the second quarter 2025 was 21.3%, compared to 20.9% in the second quarter 2024. The increase in adjusted gross margin was attributable to the closings associated with redesigned floor plans and direct construction cost savings. 'Gross margins came in at 18.9% for the quarter, representing a 270 basis point improvement over the prior quarter,' said Keith Feldman, Chief Financial Officer of United Homes Group. 'We believe that this margin expansion is a testament to the appeal of our refreshed product and our rebid initiative, and we feel that we are well positioned as we head into the second half of 2025.' Selling, general and administrative expenses ("SG&A") as a percentage of revenues was 17.1% in the second quarter 2025, which included $1.4 million of stock-based compensation, $0.7 million of transaction-related expenses, and $0.1 million related to severance costs. Excluding stock-based compensation, transaction-related expense, and severance expense, Adjusted SG&A 3 for the second quarter 2025 was 14.9% of revenues. Adjusted EBITDA 4 during the second quarter 2025 was $7.2 million compared to $7.7 million during the second quarter 2024. Six Months Ended June 30, 2025 Operating Results For the six months ended June 30, 2025, net income was $11.8 million, or $0.20 per diluted share, which included income from the change in fair value of derivative liabilities of $15.0 million, with that change predominantly due to changes in fair value on potential earn-out consideration due to fluctuation in the stock price during the measurement period, representing a non-cash item. Net income for the six months ended June 30, 2024 was $53.6 million, or $0.93 per diluted share, which included income from the change in fair value of derivative liabilities of $58.4 million. Revenue, net of sales discounts, for the six months ended June 30, 2025 was $192.5 million, compared to $210.3 million for the six months ended June 30, 2024. Home closings during the six months ended June 30, 2025 were 555 compared to 648 in the six months ended June 30, 2024. Net new home orders during the six months ended June 30, 2025 were 600 compared to 707 for the six months ended June 30, 2024. ASP of 553 production-built homes (which excludes two percentage of completion homes) closed during the six months ended June 30, 2025 was approximately $347,000, compared to approximately $338,000 during the six months ended June 30, 2024 for 585 production-built homes (which excludes three percentage of completion home and 60 build to rent homes), representing an increase of 2.7%. Gross margin during the six months ended June 30, 2025 was 17.7% compared to 17.0% during the six months ended June 30, 2024. Gross margin increased slightly, primarily due to the large number of home closings constructed with redesigned floor plans, which carry higher margins, coupled with lower interest expense as a percentage of revenue within cost of sales, partially offset by higher incentive-related costs. Adjusted gross margin during the six months ended June 30, 2025 was 20.2%, compared to 20.7% for the six months ended June 30, 2024. Adjusted gross margin declined, primarily due to higher incentives partially offset by homes closed with redesigned floor plans in 2025. Selling, general and administrative expenses ("SG&A") as a percentage of revenues was 17.8% in the six months ended June 30, 2025, which included $3.4 million of stock-based compensation, $0.7 million of transaction-related expenses, and $0.1 million related to severance costs. Excluding stock-based compensation, transaction-related expense, and severance expense, Adjusted SG&A for the six months ended June 30, 2025 was 15.6% of revenues. Adjusted EBITDA during the six months ended June 30, 2025 was $10.1 million compared to $14.9 million during the six months ended June 30, 2024. Recent Developments On May 19, 2025, the Company announced that its Board of Directors initiated a process to explore strategic alternatives, including a sale of the Company, a sale of assets, and a refinancing of existing indebtedness, among others, to maximize shareholder value. This process remains ongoing. No assurances can be given as to the outcome or timing of the Board's process. The Company does not intend to make any further comment regarding the process until the Board of Directors has approved a specific course of action or the Company has otherwise determined that disclosure is appropriate. Earnings Conference Call The Company will host a conference call via live webcast for investors and other interested parties beginning at 8:30 a.m. Eastern Time on Thursday, August 7, 2025. Interested parties can listen to the call live on the Internet under the Events & Presentations heading in the Investors section of the Company's website at Listeners should log into the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at 800-715-9871, or 646-307-1963 for international participants, Conference ID: 3108794. Those dialing in should do so at least ten minutes prior to the start of the call. An archive of the webcast will also be available on the Company's website. About United Homes Group, Inc. The Company is a publicly traded residential builder headquartered near Columbia, SC. The Company focuses on southeastern markets with active communities in South Carolina, North Carolina and Georgia. The Company employs a land-light operating strategy with a focus on the design, construction and sale of entry-level, first, second and third move-up single-family houses. The Company principally builds detached single-family houses, and, to a lesser extent, attached single-family houses, including duplex houses and town houses. The Company seeks to operate its homebuilding business in high-growth markets, with substantial in-migrations and employment growth. Under its land-light lot operating strategy, the Company controls its supply of finished building lots through lot option contracts with third parties, related parties, and land bank partners, which provide the Company with the right to purchase finished lots after they have been developed. This land-light operating strategy provides the Company with the ability to amass a pipeline of lots without the risks associated with acquiring and developing raw land. Forward-Looking Statements Certain statements contained in this earnings release, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the 'Securities Act') and Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as 'may,' 'will,' 'expect,' 'intend,' 'anticipate,' 'estimate,' 'believe,' 'seek,' 'continue,' or other similar words. Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to, statements about our future financial performance, strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: disruption in the terms or availability of mortgage financing or an increase in the number of foreclosures in our markets; volatility and uncertainty in the credit markets and broader financial markets; a slowdown in the homebuilding industry or changes in population growth rates in our markets; shortages of, or increased prices for, labor, land or raw materials used in land development and housing construction, including due to changes in trade policies; increases in interest rates or inflationary pressures, including potential tariffs; our ability to execute our business model, including the success of our operations in new markets and our ability to expand into additional new markets; our ability to identify and successfully execute on potential strategic alternatives; the potential for disruption to our business resulting from the process of reviewing strategic alternatives, and suspension or consummation of the strategic alternatives review process; our ability to successfully integrate homebuilding operations that we acquire; our ability to realize the expected results of strategic initiatives; delays in land development, community openings, or home construction, including delays resulting from natural disasters, adverse weather conditions or other events outside our control; changes in applicable laws or regulations; the outcome of any legal proceedings; our ability to continue to leverage our land-light operating strategy; the ability to maintain the listing of our securities on Nasdaq or any other exchange; and the possibility that we may be adversely affected by other economic, business or competitive factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release and are not intended to be a guarantee of our performance in future periods. We cannot guarantee the accuracy of any such forward-looking statements contained in this release, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding other risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and the 'Risk Factors' sections of the documents we file from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and our quarterly reports on Form 10-Q, copies of which may be obtained from our website at UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted gross profit is a non-GAAP financial measure used by management of the Company as a supplemental measure in evaluating operating performance. The Company defines adjusted gross profit as gross profit excluding the effects of capitalized interest expensed in cost of sales, amortization included in homebuilding cost of sales, abandoned project costs, severance expense in cost of sales, and non-recurring remediation costs. The Company's management believes this information is meaningful because it separates the impact that capitalized interest and non-recurring costs directly expensed in cost of sales have on gross profit to provide a more specific measurement of the Company's gross profits. However, because adjusted gross profit information excludes certain balances expensed in cost of sales, which have real economic effects and could impact the Company's results of operations, the utility of adjusted gross profit information as a measure of the Company's operating performance may be limited. Other companies may not calculate adjusted gross profit information in the same manner that the Company does. Accordingly, adjusted gross profit information should be considered only as a supplement to gross profit information as a measure of the Company's performance. The following table presents a reconciliation of adjusted gross profit to the GAAP financial measure of gross profit for each of the periods indicated (in thousands, except percentages). ____________________ Expand (a) Represents expense recognized resulting from purchase accounting adjustments (b) Calculated as a percentage of revenue Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Earnings before interest, taxes, depreciation and amortization, or EBITDA, and adjusted EBITDA are supplemental non-GAAP financial measures used by management of the Company. The Company defines EBITDA as net income before (i) capitalized interest expensed in cost of sales, (ii) interest expensed in other (expense) income, net, (iii) depreciation and amortization, and (iv) taxes. The Company defines adjusted EBITDA as EBITDA before stock-based compensation expense, transaction cost expense, amortization included in homebuilding cost of sales, severance expense, abandoned project costs, change in fair value of derivative liabilities, non-recurring remediation costs, and loss on extinguishment of Convertible Notes. Management of the Company believes EBITDA and adjusted EBITDA are useful because they provide a more effective evaluation of UHG's operating performance and allow comparison of UHG's results of operations from period to period without regard to UHG's financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation or amortization, or unusual items. EBITDA and adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. UHG's computations of EBITDA and adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA of other companies. The following table presents a reconciliation of EBITDA and adjusted EBITDA to the GAAP financial measure of net income for each of the periods indicated (in thousands, except percentages). Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net (loss) income $ (6,341 ) $ 28,640 $ 11,839 $ 53,578 Interest expense in cost of sales 1,632 1,659 3,133 5,172 Interest expense in other expense, net 2,383 3,578 4,844 5,720 Depreciation and amortization 515 476 1,007 926 Taxes (251 ) 218 (1,496 ) (903 ) EBITDA $ (2,062 ) $ 34,571 $ 19,327 $ 64,493 Stock-based compensation expense 1,411 1,840 3,368 3,350 Transaction cost expense 707 517 707 1,742 Amortization in homebuilding cost of sales (b) 882 913 1,563 1,861 Severance expense 125 1,504 125 1,504 Abandoned project costs 3 320 58 320 Change in fair value of derivative liabilities 6,171 (32,055 ) (15,038 ) (58,435 ) Non-recurring remediation costs — 50 — 109 Adjusted EBITDA $ 7,237 $ 7,660 $ 10,110 $ 14,944 EBITDA margin (a) (2.0 )% 31.6 % 10.0 % 30.7 % Adjusted EBITDA margin (a) 6.9 % 7.0 % 5.3 % 7.1 % Expand ____________________ Expand (a) Calculated as a percentage of revenue (b) Represents expense recognized resulting from purchase accounting adjustments Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted selling, general and administrative expense, or adjusted SG&A, is a supplemental non-GAAP financial measure used by management of the Company. UHG defines adjusted SG&A as SG&A, excluding the effects of stock-based compensation expense, transaction cost expense, and severance expense included in SG&A. Management of UHG believes adjusted SG&A provides useful information to investors because it enables an alternative assessment of the Company's operating results in a manner that is focused on its operating performance. The following table presents a reconciliation of Adjusted SG&A to the GAAP financial measure of SG&A for the three and six months ended June 30, 2025 (in thousands, except percentages). ____________________ Expand (a) Calculated as a percentage of revenue Expand UNITED HOMES GROUP, INC GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Adjusted book value is a supplemental non-GAAP financial measure used by management of the Company. UHG defines adjusted book value as total stockholders' equity (book value), excluding the effect of goodwill and derivative instruments. Management of UHG believes adjusted book value is useful to investors because it excludes the impact of purchase accounting and fair value adjustments on derivative instruments which are not expected to result in economic gain or loss. The following table presents a reconciliation of adjusted book value to the GAAP financial measure of total stockholders' equity for the period indicated (in thousands). UNITED HOMES GROUP, INC OPERATIONAL METRICS BY MARKET $'s in millions Six Months Ended June 30, 2025 2024 Period Over Period % Change Market Net New Orders Closings Net New Orders Closings Net New Orders Closings Coastal 97 94 130 93 -25 % 1 % Midlands 281 269 378 325 -26 % -17 % Upstate 164 139 168 196 -2 % -29 % Rosewood 33 29 17 22 94 % 32 % Raleigh 25 24 14 12 79 % 100 % Total 600 555 707 648 -15 % -14 % Expand As of June 30, 2025 As of June 30, 2024 Period Over Period % Change Market Backlog Inventory 5 Backlog Value 6 Backlog Inventory 5 Backlog Value 6 Backlog Inventory Backlog Value Coastal 52 $ 19.1 52 $ 18.1 — % 6 % Midlands 83 29.4 125 42.4 -34 % -31 % Upstate 49 16.0 55 15.4 -11 % 4 % Rosewood 14 8.7 11 7.9 27 % 10 % Raleigh 4 1.7 5 1.9 -20 % -11 % Total 202 $ 74.9 248 $ 85.7 -19 % -13 % Expand 1 Adjusted book value is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 2 Adjusted gross margin is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 3 Adjusted SG&A is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 4 Adjusted EBITDA is a non-GAAP financial measure. See 'Reconciliation of Non-GAAP Financial Measures.' 5 Backlog inventory consists of homes that are under a sales contract but have not closed. Backlog may be impacted by customer cancellations. 6 Backlog value is calculated as the total contract value of homes in backlog. Expand
The Hill
6 days ago
- Health
- The Hill
Democrats press UnitedHealth Group over nursing home policies
Democratic Sens. Ron Wyden (Oreg.) and Elizabeth Warren (Mass.) are launching an investigation into UnitedHealth Group (UHG) over its actions reportedly steering seniors away from hospital visits for the sake of cutting costs. In a letter to UHG CEO Stephen J. Hemsley, Wyden and Warren cited reporting from outlets including The Guardian that said his company was paying nursing homes to reduce hospital transfers of sick patients. The senators wrote that UHG representatives told them bonus programs for nursing homes are offered to encourage 'adherence to certain quality measures.' One of these programs allows for nursing homes to receive bonuses if they reach certain levels of influenza and pneumococcal vaccination rates and cholesterol medication adherence rates, while also maintaining a hospital admission per thousand rate below a certain threshold. They also pointed to UHG institutional special needs plans, provided through its subsidiary Optum, which reportedly disincentivize 'medically-necessary hospitalizations and emergency room visits.' These plans also reportedly pressure nursing home residents to sign 'do not resuscitate' (DNR) and 'do not intubate' (DNI) orders. At the time of The Guardian's reporting in May, UHG denied it was preventing hospital transfers or pushing patients to sign DNRs and DNIs. 'Put simply, these allegations suggest that UHG appears to be prioritizing its bottom line at the expense of the health and safety of nursing home residents enrolled in UHG I-SNPs. Nursing home residents and their families should not live in fear of a for-profit health care company withholding care when it is most critical,' the lawmakers wrote. Though they expressed their support for evidence-based models that reduce 'unnecessary hospitalizations of nursing home residents,' Wyden and Warren noted a briefing with UHG representatives did not resolve their concerns surrounding these reports. The lawmakers requested information on UHG's I-SNP model, Optum's policies on transferring residents on I-SNP to the hospital as well as information on its bonus programs. 'Any attempt to take advantage of vulnerable nursing home residents is unacceptable, especially to pad a for-profit insurance company's revenues. It is vital that UHG respond to these alarming reports and provide prompt, detailed responses to our questions,' wrote Wyden and Warren.
Newsweek
31-07-2025
- Business
- Newsweek
How Pentavere's CEO Launched An AI Company—Without VC's Help
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. This is a preview of Access Health—Tap here to get this newsletter delivered straight to your inbox. Good morning. UnitedHealth Group's (UHG's) second-quarter earnings report sent a clear message: The payer giant is in reset mode. After months of mounting medical costs, especially in Medicare Advantage (MA), UHG acknowledged it mispriced key products as utilization came in hotter than expected. At the beginning of 2025, the company expected to make up to $30 per share. But their forecast has nearly halved since then, settling at an adjusted outlook of $16 per share. For health care providers, this marks a notable inflection point. The insurer that once set the pace for aggressive growth in MA is pulling back. UnitedHealthcare increased MA membership by approximately 385,000 members between December 2024 and February 2025, according to an analysis from Healthcare Dive—but the country's largest MA provider now plans to drop plans for nearly 600,000 enrollees, UHG executives said on Tuesday. The company signaled a more conservative pricing strategy ahead and plans to exit some underperforming markets, both moves that could impact provider contracts and enrollment dynamics across regions. In contrast, provider-side operators like HCA Healthcare and Tenet posted strong quarters this week, benefiting from stable volumes and a growing shift toward ambulatory care. That financial resilience, even amid reimbursement and labor headwinds, highlights a divergence. Providers appear better positioned to manage rising demand, while payers wrestle with recalibration (at least for now). Of course, federal policy is also reshaping the dynamics between payers and providers. Recent changes to MA contract audits, risk adjustment and star ratings are putting pressure on insurance giants while placing renewed scrutiny on their business practices. These shifts could mean more favorable conditions for health systems in the long term, particularly if regulatory efforts hit their targets and actually improve transparency and access. But in the short term, they're contributing to volatility in plan behavior and reimbursement trends. And as Medicaid cuts loom, patient utilization patterns are likely to respond. Hospitals are expecting downstream spikes in emergency department and uncompensated care. As we explored in last week's Mercer report, employers are planning to shift more of the cost burden onto employees—so commercially insured patients may be changing their habits, too. This week, hospital execs and industry analysts told me that they expect a more cautious and cost-sensitive UHG at the negotiating table. The balance of power is shifting slowly, for now. But if I've learned anything from the year-to-date, it's that anything can happen. In Other News Majorhealth care headlines from the week Newsweek and Statista released our ranking of America's Leading Doctors today, recognizing 2,845 outstanding specialists across 15 critical fields. today, recognizing 2,845 outstanding specialists across 15 critical fields. Senior Reporter Lauren Giella spoke with honorees and found a theme— the nation's top specialists are steering away from invasive procedures and pivoting towards personalized care . Read her report and learn more about the methodology here. . Read her report and learn more about the methodology here. Texas has disenrolled nearly 1.8 million people from Medicaid coverage since March 2023 , according to new KFF data reported by my colleague Jasmine Laws. Meanwhile, Florida has removed more than a quarter of Medicaid enrollees from the state's plan over the past two years , totaling around 1.4 million Americans. , according to new KFF data reported by my colleague Jasmine Laws. , totaling around 1.4 million Americans. Yesterday marked the 60th anniversary of the Medicare and Medicaid Act being signed into law . Kaufman Hall Managing Director Lisa Goldstein shared a timely reflection on the past six decades as the One Big Beautiful Bill seeks to roll back federal health care spending. Read her call to action here. . Kaufman Hall Managing Director Lisa Goldstein shared a timely reflection on the past six decades as the One Big Beautiful Bill seeks to roll back federal health care spending. Read her call to action here. Major health care and IT companies gathered at the White House yesterday to "begin laying the foundation for a next-generation digital health ecosystem," per CMS. Attendees—including Amazon, Anthropic, Apple, Google and OpenAI—learned more about CMS' voluntary criteria for the new data exchange, which the agency says will be accessible across "all" networks, including EHRs. to "begin laying the foundation for a next-generation digital health ecosystem," per CMS. Attendees—including Amazon, Anthropic, Apple, Google and OpenAI—learned more about CMS' voluntary criteria for the new data exchange, which the agency says will be accessible across "all" networks, including EHRs. So far, 21 networks have pledged to meet CMS' Interoperability Framework in the first quarter of 2026. Seven EHRs and 11 health systems have also agreed to participate, aiming to improve interoperability and patient outcomes while lessening the burden on providers. aiming to improve interoperability and patient outcomes while lessening the burden on providers. Medical device firms no longer expect the same tariff charges that they forecasted in the early days of the Trump administration, MedTech Dive reported. Philips, Abbott, Johnson & Johnson and Boston Scientific have significantly dialed back their tariff charge projections since last quarter, with the latter two cutting their estimates in half. Pulse Check Executive perspectives on key industry issues Aaron Leibtag is the co-founder and CEO of Pentavere. Aaron Leibtag is the co-founder and CEO of Pentavere. Pentavere On Tuesday, I connected with Aaron Leibtag, co-founder and CEO of Pentavere: an AI company that extracts evidence from unstructured health data to identify patients who are eligible for approved medications or interventions. Pentavere stands out amongst a swath of health tech competitors. In JAMA Otolaryngology, it published the first paper demonstrating that AI can analyze unstructured clinical text in EHRs to support and accelerate cancer staging as a co-pilot for clinicians. It won the prestigious Prix Galien award last year and was a finalist in Newsweek's 2025 AI Impact Awards. And earlier this month, Healwell AI acquired full ownership of Pentavere's proprietary DARWEN platform for nearly $14 million. Interestingly enough, Leibtag didn't get his start in the health care industry. He spent about 20 years working for some of the largest financial service companies around the globe, designing their systems around hedging annuity pricing. We spoke about the unique insight that gave him as he architected Pentavere—including why he chose not to get involved with venture capital firms, and how he made it work by taking a road less traveled. Read a portion of our interview below. Editor's Note: Responses have been lightly edited for length and clarity. As health systems work on digital transformation and AI integration, what are the biggest lessons they could learn from the financial industry? I think if we look at the financial industry as that guide, we will continue to not make the traction in health care because the incentives are so much different. The emotion around it, and therefore, legislation, policy, politics around it, is so much different. We don't have to apologize as a hedge fund manager to use data to create a return on capital, but we have to be very aware of what we do with Alexis' health information. There should be privacy protocols that are different from other industries, right? As an entrepreneur who bootstrapped, scaled, exited and built an AI company that received a Prix Galien award without going the venture capital [VC] route, without raising significant amount of capital, we were successful because we put the patient first. So I believe what health care needs to look at in finance is the recognition that great data and objective insights [are] a massive unlock, and we should be unafraid and unapologetic to use technology. But the models and how we deploy them and how we unlock innovation can't just be about a product, because you've got to validate technology. And that was a different approach we took. We embedded ourselves in a hospital with no idea what the product would be. We just said, "How is it that 80 percent of health data isn't used?" And we also said if we can validate and think through and build trust with our technology in the same way that our medicines build trust—clinical trials, experimentation, ethics, approved protocols, proper methodologies—then that should give us a point of differentiation. But as you know, financial institutions do not fund digital health companies in that way. More than 60 percent of digital health venture funding went to AI-startups in the first half of 2025, and these companies are seeing significant investments: $34 .4 million per round, on average, which is 83 percent more than non-AI digital health companies. Why did you choose not to go the VC route with Pentavere, and how do you see that choice working to keep patient needs at the core? This is not negative around the VC route, but the incentives and metrics and milestones around that capitalization are very clear and might not fit within the health care setting. What do I mean by that? You go and you say, "Here's my big idea, here's the addressable market. I'm going to have this AI capability that's going to free up all this time for doctors." And then you go out and raise capital, and say, "Here's what the product is, here's my revenue source. I'm gonna get X amount of subscriptions, and I'm gonna build a sales team to scale that." Well, a lot of these companies hit a wall because what about clinical validation? What about privacy recognition? What about security and data access? Those are all costs and barriers. But if you put the patient first and you say, "Let's create a consortium of patients to really understand their problems, really understand what they go through in the burden of disease, really understand how clinicians treat those patients," the patient becomes foundational to how you design and think through your product. If I were to go to a VC with [something] that niche, they wouldn't fund the company yet. I was able to do it differently because we didn't have that product focus—but we were focused on the problem. We embedded ourselves in the hospital. We published a paper. Somebody from Roche read that paper, [and they] happened to be looking for a data set around advanced lung cancer patients on immunotherapies with liver metastases. We were able to go to the hospital who didn't have that data set—they paid medical students and interns, or companies with huge operations offshore, to manually annotate the data. When we said that Roche will pay under a clinical study to test our technology, the hospital will get a unique data set that can help them with research that they could sell, we were the first to prove we can get the value of the models. That's how we were able to fund the company. Then pharma started calling, and we ended up building our IP through the delivery of retrospective, non-interventional clinical studies. We actually got pharma to fund the building of our AI platform, and we hospitals agreed to give us rights to the models, because everybody was winning, especially the patient tied to the incentive. Pharma wanted a paper to prove their therapeutics. The hospital wanted data sets without the labor costs. We had no idea around product. We just said that we can unlock the electronic health record and build trusted AI that solves [a major patient] problem. We could win. If I would have taken that to a VC, they would have said, "Yeah, but it's service revenue, not recurring revenue." That's of no fault to the VCs. It's just they see 300 to 400 deals a year. They choose two or three, and they've got a checklist, right? C-Suite Shuffles Where health care leaders are coming and going MUSC Health and The Medical University of South Carolina has named Amar Nagaram its enterprise chief information officer . He'll join the Charleston-based system from Indiana University Health, where he served as associate CIO and was a critical part of its recent Epic rollout. . He'll join the Charleston-based system from Indiana University Health, where he served as associate CIO and was a critical part of its recent Epic rollout. Dr. Caroline Carney is the new CEO of Magellan Health , succeeding Derrick Duke. She joins the Frisco, Texas-based company in 2016 and most recently led its behavioral health business. , succeeding Derrick Duke. She joins the Frisco, Texas-based company in 2016 and most recently led its behavioral health business. GoodRx has tapped Laura Jensen—former head of manufacturer & prescriber business development at Amazon Pharmacy—to serve as its chief commercial officer and president of pharma solutions. Executive Edge How health care execs are managing their own health Paul Markovich is the president and CEO of Ascendiun. Paul Markovich is the president and CEO of Ascendiun. BCBS A few weeks ago, I spoke with Paul Markovich, president and CEO of Ascendiun, about prior authorization reform. (You can read his Pulse Check interview here.) When he took my video call, he was on a walking pad—so naturally, I had to bring him back to share his routine. Here's what Markovich told me about his contagious workday treadmill schedule: "As a former collegiate athlete, I've come to deeply value the role that movement and discipline play in sustaining strong leadership and personal well-being. In the context of a fast-paced professional life, it's easy to let health and wellness slip to the sidelines but I've found that maintaining routines that support my physical and mental health help me show up better for my team. Prioritizing wellness isn't just about staying fit; it's about creating the energy and clarity needed to make thoughtful decisions and lead with purpose ." ." "One way I incorporate wellness into my daily routine is by walking on the treadmill under my desk. This allows me to remain physically active throughout the day and enhances my focus during meetings , which is an approach that several colleagues have since adopted as well." , which is an approach that several colleagues have since adopted as well." "In addition, I play on a recreational hockey team—the Oakland Seals—in an over-40A league in Oakland. Participating in team sports continues to be a meaningful outlet, offering both a sense of camaraderie and a valuable means of managing stress. Whether on the ice or in the office, I have found that movement and connection are essential to sustaining long-term performance and personal fulfillment." This is a preview of Access Health—Tap here to get this newsletter delivered straight to your inbox.
Yahoo
31-07-2025
- Business
- Yahoo
UnitedHealth Group didn't just miss earnings, it did something far worse
UnitedHealth Group, America's largest healthcare company, shocked investors Tuesday by reporting unexpectedly awful financial performance. It's the second consecutive quarter the company has committed that sin. As a result, UHG is no longer just a company that missed its numbers. It's something much more rare: A huge enterprise—No. 3 on the Fortune 500—confessing fundamental, long-standing problems endemic throughout the organization that may take years to remedy. The crisis first manifested in April. UHG was emerging from the trauma of executive Brian Thompson's high-profile murder in December when the company released first-quarter profits far below Wall Street's expectations. The stock plunged, slashing over $100 billion from market value within hours. A month later, CEO Andrew Witty abruptly resigned for unspecified personal reasons, and former CEO Stephen Hemsley returned to the job. The stock plummeted again. The next day, the Wall Street Journal reported that the Department of Justice was investigating UHG for possible criminal Medicare fraud. The company said it hadn't been notified of any such investigation. The stock nosedived yet again. In less than a month, this corporate giant had lost more than half its value. 'This is a stock that every growth-oriented portfolio manager in the world owned for a decade and made money on it like clockwork,' Whit Mayo, an analyst at the Leerink healthcare investment bank, told Fortune at the time. 'It's stunning. It's unthinkable.' On July 24, five days before UHG's second quarter earnings release, the company acknowledged that the Justice Department was conducting criminal and civil investigations of the company over its Medicare billing practices. You can guess what the stock did. And then came the report of second quarter earnings. Now, after months of being pummeled by investors, regulators, and media, Hemsley has admitted that UHG needs an exhaustive, stem-to-stern rehab—an extraordinarily audacious goal for an organization of some 400,000 employees. It's a stark acknowledgement of deep and wide problems. How deep and wide? Hemsley says UHG will change 'leadership, our businesses, our culture, approaches and practices, our board, governance and succession oversight…' Executives now beseech shareholders for patience—quite a change from four months ago, before $330 billion of market cap evaporated. Dr. Patrick Conway, CEO of Optum, one of UHG's two main divisions, now tells investors, 'We know Optum's performance has not met expectations.' Tim Noel, CEO of the other division, insurance, says, 'We are approaching our business with greater humility.' Hemsley appears to be setting expectations low. He says he does not see profit increasing at all this year. Next year, he sees 'solid but moderate' earnings growth. Not until 2027 does he expect 'our earnings growth outlook strengthening quickly.' Even that schedule may not allow enough time. When Hemsley returned as CEO in June, the board of directors gave him a one-time $60-million award of stock options that would vest after three years. That term seemed lengthy for a 73-year-old whose objective was to right the ship. Now, after the latest quarter and the highly ambitious wide-ranging transformation he's attempting, investors may wonder if three years will be enough. This story was originally featured on Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data
