UnitedHealth Group (UNH) shares experienced a significant decline after the company reported weaker-than-expected second-quarter earnings and sharply lowered its full-year profit outlook. The health insurer posted adjusted earnings of $4.08 per share, falling short of the projected $4.48. Despite a 13% year-over-year revenue growth to $111.6 billion, the figure still slightly missed analyst forecasts.
The company has now reinstated its full-year earnings guidance, which it had previously withdrawn. The revised outlook expects adjusted earnings to reach at least $16 per share for 2025, a notable drop from its earlier projection of $26 to $26.50. Analyst expectations had hovered around $20.64. Nonetheless, some market analysts still view the stock favorably, setting a target price near $379, suggesting potential upside of more than 30%.
One of the primary drivers behind the weak performance is a sharp rise in healthcare expenses, which surged nearly 20% to reach $78.6 billion. The increase is largely due to higher usage of emergency services, mental health treatments, and costlier prescription medications. Adding to the pressure, UnitedHealth is also facing federal scrutiny, as U.S. authorities are conducting investigations into possible overcharging issues related to Medicare Advantage, a government-backed health insurance program.
Leadership at UnitedHealth has acknowledged the financial and operational hurdles. Following the unexpected resignation of former CEO Andrew Witty, Stephen Hemsley has resumed the chief executive role. He emphasized the company’s commitment to restoring financial stability by tightening spending and focusing on sustainable, long-term business strategies.
Key points:
- Q2 earnings per share stood at $4.08, missing Wall Street estimates; revenue rose by 13% but came in slightly below projections.
- 2025 profit guidance was cut significantly to a minimum of $16 per share.
- Higher healthcare costs and federal investigations are impacting investor confidence.
In summary, while UNH stock is under pressure due to rising costs and regulatory headwinds, some analysts continue to believe in the company’s potential for recovery in the coming years.
