UnitedHealth chopped its 2025 forecast after being surprised by care use from its Medicare Advantage customers in a worse-than-expected first quarter.
Shares of the health care giant tumbled early Thursday, and the report rattled insurance stocks across the sector.
UnitedHealth said a rise in care use came in far above what the company planned for 2025 and became apparent as the quarter ended. The jump was particularly notable in doctor and outpatient services, which don’t involve overnight hospital stays.
The company’s UnitedHealthcare insurance business is the nation’s largest provider of Medicare Advantage plans, which are privately run versions of the federal government program mostly for people ages 65 and older.
UnitedHealth “did not perform up to our expectations” in the first quarter, CEO Andrew Witty said in a statement. He added that the company was aggressively addressing its challenges.
UnitedHealth also saw a jump in care use last year. Insurers have been dealing with this trend for several quarters now, going back to the end of the COVID-19 pandemic, when patients started returning to regular doctor visits and seeking other care.
UnitedHealth Group Inc. operates the nation’s largest health insurer, UnitedHealthcare, which covers more than 50 million people. It also has a large pharmacy benefit manager that runs prescription drug coverage and a growing business that delivers care and provides technical support.
Overall, UnitedHealth reported adjusted earnings of $7.20 per share on $109.58 billion in revenue in the first quarter.
Analysts expect earnings of $7.29 per share on $111.53 billion in sales, according to the data firm FactSet.
For 2025, UnitedHealth now predicts adjusted earnings ranging from $26 to $26.50 per share. The Eden Prairie, Minnesota, company had predicted last December earnings of $29.50 to $30 and then reaffirmed that forecast in January.
For 2025, analysts forecast earnings of $29.72 per share.
Company shares were down more than 20% to $466.44 in premarket trading.
UnitedHealth is the first insurer to report results every quarter, and many on Wall Street see it as a bellwether for the sector. Shares of several other insurers plunged in early trading Thursday.
Humana Inc., the nation’s second-largest provider of Medicare Advantage plans, was down 15%.
UnitedHealth’s report will call into question the 2025 guidance of every insurer, TD Cowen analyst Ryan Langston said in a research note.