UnitedHealth Group reported on Thursday that it earned lower than anticipated this previous quarter, citing greater medical prices and stress on its insurance coverage division at a time when the corporate continues to be reeling from the stunning homicide of a high govt final month.
Revenues for UnitedHealth Group amounted to $100.8 billion for the fourth quarter, beneath what analysts had predicted however nonetheless 6.8 % greater than in the identical quarter the 12 months earlier than. The corporate’s full-year income for 2024 rose to $400.3 billion. For UnitedHealthcare, the insurance coverage division, full-year income elevated to $298.2 billion, up 6 % from 2023.
The outcomes had been the corporate’s first since Brian Thompson, the chief govt of UnitedHealthcare, was gunned down in entrance of a Midtown Manhattan resort.
The homicide unleashed public outrage geared toward massive well being insurers, over lack of entry to well being care and denials of protection and insurance coverage claims.
Some shareholders have urged UnitedHealth to difficulty a report on its practices that “restrict or delay entry to well being care.”
Andrew Witty, UnitedHealth Group’s chief govt, mentioned on a name with analysts on Thursday that frustrations about claims, together with delays in receiving care and protection, had been “key areas for us to work onerous at to enhance.”
A successor to Mr. Thompson has not been named but. Mr. Witty didn’t share particulars about filling the submit, nor did he immediately tackle the current shareholder marketing campaign.
However he and different executives mentioned the lack of Mr. Thompson on the high of the decision.
“He devoted his time to serving to make the well being system work higher for the entire folks we’re privileged to serve,” Mr. Witty mentioned.
UnitedHealth’s outcomes, which disillusioned Wall Avenue, in some ways mirrored broader developments and lingering points for the trade. For a number of quarters, U.S. well being insurers have taken hits to their earnings from excessive medical bills and a tightening of presidency cost insurance policies.
John Rex, the corporate’s chief monetary officer, pointed to cutbacks in authorities charges within the cost system for Medicare Benefit program, the non-public insurance coverage arm of the federal protection for folks 65 and over. UnitedHealth has substantial enterprise in these Medicare non-public plans.
Medicare Benefit efficiency has declined all through the trade not too long ago, partly due to regulatory modifications meant to stop overcharging and following elevated well being spending amongst some older populations.
Mr. Witty additionally mentioned there have been prices related to modifications in Medicaid, the federal-state insurance coverage program for the poor.
The corporate’s medical value ratio, a measure of the price of offering care, got here in greater than anticipated in the newest quarter, which might add gas to traders’ issues that elevated prices for supply of care may linger, mentioned John Boylan, an analyst at Edward Jones, an funding agency.
UnitedHealth, nevertheless, saved its full-year steerage for 2025 intact, unaltered by current stress. Analysts at Morgan Stanley mentioned in a analysis observe that the corporate had set “moderately prudent targets” for this 12 months.
“Total, our view is that United is effectively positioned to navigate the evolving well being care panorama attributable to its diversified enterprise mannequin,” Mr. Boylan mentioned.
UnitedHealth’s inventory fell greater than 4 % in Thursday morning buying and selling as traders digested the weaker-than-expected outcomes. UnitedHealth’s outcomes, typically seen as a bellwether for efficiency throughout the trade, pushed down shares of its rivals, together with CVS Well being, which is the dad or mum of the insurer Aetna.
UnitedHealth Group additionally owns Optum Rx, one of many nation’s largest pharmacy profit managers, which employers and authorities packages rent to supervise their prescription-drug advantages.
Optum Rx has confronted scrutiny from regulators over issues that it has raised drug costs, prioritizing its personal pursuits above these of sufferers, employers and taxpayers. Simply this week, the Federal Commerce Fee launched a report detailing how P.B.M.s may very well be inflating drug prices.
The company criticized Optum Rx and two different main profit managers — CVS Well being’s Caremark and Cigna’s Categorical Scripts — for elevating costs on generic medicine for most cancers, coronary heart illness and different diseases as excessive as 1,000 % of nationwide common prices.
Mr. Witty, the UnitedHealth Group chief govt, defended Optum’s practices, stressing that 98 % of the rebates had been handed to prospects. By 2028, he mentioned, all rebates can be handed on. Drug costs in the US, Mr. Witty argued, are “de novo set too excessive relative to another worth on the earth,” and shifted the blame to drug firms.
“The P.B.M. acts on behalf of the final word payer — the employer, the union, the state,” Mr. Witty advised analysts.
Mr. Witty didn’t tackle investigations by the Justice Division or lawsuits looking for to dam its proposed acquisition of Amedsys, a big house care and hospice firm.
Past rising medical prices and rising use of well being care companies, UnitedHealth executives pointed to the widespread ransomware assault in 2024 that weighed on the corporate’s full-year earnings. The cyberattack pressured the shutdown of the corporate’s sprawling billing and cost system, Change Healthcare. The corporate has estimated that the information breach of well being and privateness info affected greater than 100 million folks, and mentioned this week {that a} evaluate of private info concerned within the incident was “considerably full.”
Luigi Mangione, 26, has been charged with a number of state and federal counts of homicide in addition to weapons and stalking offenses. He has pleaded not responsible.
UnitedHealth and the police have mentioned that neither he nor his mother and father had medical insurance coverage via UnitedHealth.
