UnitedHealth Group, the largest health insurer in the U.S., has seen a big drop in its stock price, nearing its 52-week low. This decline followed a disappointing earnings report for the first quarter and a significant cut to its profit forecast for 2025.
The company’s stock is under pressure due to concerns about its ability to control rising healthcare costs and remain profitable.
In its Q1 2025 earnings report, UnitedHealth reported adjusted earnings per share of $7.20, which was lower than analysts’ expectations of $7.29. The company’s revenue was $109.6 billion, also below the forecast of $111.5 billion.
The earnings miss happened because more Medicare Advantage members used healthcare services than expected, leading to higher costs.
As a result, UnitedHealth lowered its 2025 earnings per share guidance to between $26 and $26.50, down from the previous estimate of $29.50 to $30. This new outlook was below analysts’ predictions of $29.73 per share, raising more concerns among investors.
Following the earnings announcement, the stock price dropped by over 22%, marking one of the largest declines for the company in decades. This sharp drop caused a significant loss in market value, with UnitedHealth’s stock trading near its 52-week low of about $410.
Investors and analysts have reacted with caution, leading several firms, including Raymond James, Oppenheimer, and KeyBanc, to lower their price targets for the stock. Despite these issues, UnitedHealth remains a leader in healthcare, focusing on controlling costs and improving efficiency.
Looking ahead, UnitedHealth will need to regain investor confidence by addressing the rising costs in its Medicare Advantage business and enhancing its operations.
How well the company manages these challenges will be key to stabilizing its stock price and regaining growth.