UnitedHealth Group (NYSE: UNH) shares reached a new 52-week low in morning trading, reflecting mounting challenges for the healthcare giant.
The stock’s decline follows a turbulent period marked by disappointing first-quarter results, a lowered 2025 earnings outlook, and persistent concerns over rising costs in its Medicare Advantage business.
The company’s recent financial update revealed that higher-than-expected medical costs, especially from increased physician and outpatient service usage among Medicare Advantage members, have significantly impacted profitability.
UnitedHealth now forecasts adjusted earnings for 2025 in the range of $26 to $26.50 per share, a notable downgrade from its earlier guidance and well below analyst expectations. This revision triggered a sharp sell-off, with shares plunging as much as 22% in a single day-the steepest drop in over two decades.
Despite the dramatic decline, UnitedHealth remains profitable and continues to post steady revenue growth, with a 10% increase reported year-over-year. The company maintains a strong balance sheet and a history of consistent dividend payments, which may offer some reassurance to long-term investors.
However, the stock’s performance has lagged the broader market, with a more than 70% drop over the past year, underscoring the severity of the current headwinds.
Analysts have responded by lowering their price targets and adopting a more cautious outlook on the stock. The broader health insurance sector has also felt the impact, as UnitedHealth’s challenges highlight industry-wide pressures from rising care utilization and regulatory scrutiny.
Investors are closely watching UnitedHealth’s next moves as management works to address these cost pressures and stabilize performance.
While the stock’s valuation now appears discounted compared to historical averages, the path to recovery will depend on the company’s ability to manage costs and restore confidence in its long-term growth prospects.