Review of the UnitedHealth Group (UNH) Q2 2025
Unitedhealthcare Signage will be exhibited on July 19, 2023 in an office building in Phoenix, Arizona.
Patrick T. Fallon | AFP | Getty pictures
Unitedhealth group On Tuesday there was an outlook from 2025, which no longer declined the expectations of Wall Street, since the company's insurance unit continued to deal with higher medical costs.
The UnitedHealth Group's shares fell by almost 4%in the morning trade on Tuesday.
The company assumes that it will achieve adjusted profit of at least $ 16 per share, with sales of $ 445.5 billion to $ 448 billion. The analysts from Wall Street had expected adjusted profit from 2025 of $ 20.91 per share and sales of $ 449.16 billion, according to LSEG consensus estimates.
In addition to the higher medical costs, the updated outlook from “previously planned portfolio actions”, which the company no longer pursues, deprives Tim Noel, CEO of Unitedhealthcare during a win on Tuesday. He did not state any details about these actions.
The Unitedhealth Group expects it to return to profit growth in 2026.
The share fell in May after the company suspended the instructions from 2025 due to increased medical costs and announced the abrupt departure of the former CEO Andrew Witty. The report on Tuesday contributes to a growing series of setbacks for the company, to which the country's largest and most powerful insurer, Unitedhealthcare, is heard and is often regarded as a Bellwether in the industry.
The company expects the medical care of the insurance unit – a measure of the entire medical expenditure compared to the collected premiums – between 89% and 89.5%. A lower ratio usually indicates that a company has collected more in premiums than was paid out in services, which leads to higher profitability.
In the second quarter, this ratio of 85.1% rose to 89.4% in the same period last year, especially because of the medical costs. The company said that health costs in the quarter rose much faster than what it calculated in premiums. In addition, the financing cuts of Medicare deteriorated.
Analysts had expected that the ratio of Street Account was reached at 89.3% for the quarter.
The UnitedHealth Group's report signals that the medical costs in Medicare Advantage plans for the broader health insurance industry may not alleviate shortly. Unitedhealthcare, the UNITEDHEALTH GROUP's armed insurance arm, is the largest provider of this privately operated Medicare plans in the country.
The insurers set higher expenses for Medicare Advantage plans last year because more and more seniors return to hospitals to subject procedures that they had delayed during the Covid 19 pandemic such as common and hip replacement.
“When we prepared our offers from Medicare Advantage from 2025 in the first half of 2024, we significantly underestimated the accelerating medical trend and did not change the services or planned offers sufficiently to rule out the pressure that we are now experiencing,” said Noel during the call.
Noel said that the doctor and outpatient care made 70% of the pressure on medical costs this year. In the second quarter, however, inpatient care accelerated, and the company expects that it will make a “relatively large part of the pressure” throughout the year.
Unitedhealthcare continues to ensure that more patients use the stays and observation stays, with more services being offered and bundled as part of every visit, said Noel.
The Unitedhealth Group reported in the second quarter compared to the expectations of Wall Street, based on a survey of LSEG analysts:
- Win each share: $ 4.08 adapted compared to USD 4.48
- Revenue: 111.62 billion USd $ 111.52 billion expected
The company achieved a net result of 3.41 billion US dollars or $ 3.74 per share for the quarter. This is compared to a net result of $ 4.22 billion or $ 4.54 per share during the same period last year.
With the exception of certain items, the adjusted profits for the quarter amounted to $ 4.08 per share.
Unitedhealth generated sales of 111.62 billion US dollars in the second quarter, which increased by more than 12% compared to growth within Unitedhealthcare and the optum unit of the company in the same period last year. This segment includes optum health, which offers care and recommends providers, as well as the Pharmacy Benefit Manager Optum RX.
More CNBC health insurance
Despite higher medical costs, Unitedhealthcare achieved sales of $ 86.1 billion in the second quarter, which increased an increase of 17% compared to the same period in the previous year. According to StreetCcount estimates, the analysts expected that Unitedhealthcare would book 84.89 billion US dollars for this period.
While the sales of Optum RX rose by almost 19% to $ 38.46 billion, Optum Health's turnover fell by 7% to $ 25.21 billion in the second quarter compared to the previous year. The property of the company to an insurer, a pharmacy and nursing homes enabled him to dominate the industry, but the decline in the optum Health has attracted Wall Street's attention.
“We know that the performance of optum has not fulfilled expectations. We are new to a fundamental execution to ensure that we enable our potential to improve the health system for everyone,” said Dr. Patrick Conway, CEO of Optum, in publication.
The company expects the overall optum unit 2025 to achieve sales of $ 266 billion to $ 265.7 billion.
Reaction of Unitedhealth to Doj examination
In particular, the report is only a few days after Unitedhealth has shown that he complies with the investigation by the Ministry of Justice for his Medicare -Billing practices.
Noel said on Tuesday that the company was expanding its efforts to monitor its business practices and prevent additional costs for consumers.
“We have increased our tools for audit, clinical guidelines and payment integrity tools to protect customers and patients from unnecessary costs,” he said, adding that the company uses AI tools to improve patient and provider service and save costs.
During the profit, the new CEO of the Unitedhealth Group, Stephen Hemsley, admitted that the company and other insurers “continue the continued public controversy over long -term practices”.
He added that we made the “environmental factors” that influence the entire sector, “made prices and operational errors and others”.
“You get the necessary attention. Our critical processes, including risk status, care management, pharmaceutical services and others are checked by independent experts and they are checked and reported every year,” he said. “And these processes can be checked by external stakeholders at any time.
These experts include analysis Group and FTI Consulting, said Hemsley. He added that the company expects the review to be completed by the end of the third quarter of this year to publish a first report on the results in the fourth quarter.
“While we believe in our supervision and the integrity of these processes, wherever you are determined to differ with the prescribed practice, you will be remedied immediately and we will continue this way,” he added.
It is Unitedhealth's first winning report under Hemsley, which has the task of restoring the trust of investors and turning a fighting company that has continued to have a strong public exam in recent months. The UnitedHealth Group's shares fell by more than 44% in the year, which is partly driven by the examinations of the doj and its suspended prospects.
The company's 2024 wasn't better. Brian Thompson, the CEO of Unitedhealthcare, the murder of Unitedhealthcare, the following public setback and a historical cyber attack that affected millions of Americans.
