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UnitedHealth Group (UNH) stock tumbled 19% Thursday after the company drastically cut its 2025 earnings forecast, citing significantly higher-than-expected medical costs tied to a surge in demand for outpatient and physician services within its Medicare Advantage plans.
The insurer now expects adjusted earnings per share to fall between $26 and $26.50, well below its earlier guidance of $29.50 to $30 and analysts’ expectations of $29.73, according to data from LSEG.
The shock guidance sent ripples through the healthcare sector, dragging down shares of key rivals. Elevance, CVS Health, Cigna, Centene, and Humana fell between 3% and 13% in premarket trading, with the overall sector poised to shed more than $130 billion in market cap, CNBC reported.
“This was a stock that was a safe haven for so many among tariffs and policy uncertainty,” said Kevin Gade, COO of Bahl & Gaynor, which holds UnitedHealth shares. “Nobody was expecting this level of a miss or cut to guidance.”
UnitedHealth CEO Andrew Witty acknowledged the shortfall, stating, “We are aggressively addressing those challenges to position us well for the years ahead.”
While insurers stumbled, hospital operators HCA Healthcare and Tenet Healthcare jumped between 3% and 7%, buoyed by expectations of sustained high demand for healthcare services.
The health insurance industry has faced increasing pressure since mid-2023, dealing with lower government payments, rising care utilization, and mounting public scrutiny — intensified by the late-2024 murder of UnitedHealth executive Brian Thompson, which sparked widespread criticism of insurer practices online.