Minnetonka, Minnesota — A surprising Medicare Advantage cost spike pushed UnitedHealth into a rare deep dive Thursday, after the health-care behemoth cut its 2025 forecast following a weaker-than-expected first quarter.
The company’s stock price fell by more than $130 Thursday afternoon, indicating its worst one-day performance in over 25 years. Its first-quarter report also alarmed other health insurers.
UnitedHealth executives reported that care use among people enrolled in its Medicare Advantage plans increased at twice the rate they had anticipated for the quarter.
This contributed to an overall performance that was “frankly unusual and unacceptable,” according to CEO Andrew Witty on a conference call with analysts. However, he emphasized that this was a temporary and fixable problem.
The unexpected use surge did not affect the company’s other lines of coverage, which include commercial insurance and state- and federally funded Medicaid plans.
UnitedHealth Group Inc. runs UnitedHealthcare, the country’s largest health insurer, which serves over 50 million people. It also has a large pharmacy benefit manager that manages prescription drug coverage, as well as a growing Optum segment that offers care and technical support.
With over 8 million customers, UnitedHealthcare is the nation’s largest provider of Medicare Advantage plans. These are privately run versions of the federal government’s coverage program, primarily for people aged 65 and up.
According to Daniel Barasa, a portfolio manager at Gabelli Funds, insurers have struggled to maintain Medicare Advantage profit margins due to funding cuts under former President Joe Biden’s administration, as well as rising care use and costs.
However, he noted that a recently announced Medicare Advantage rate increase in 2026 should help beginning next year.
Overall, UnitedHealth earned $6.3 billion in the quarter. That compares to a $1.41 billion loss last year, when the company incurred significant costs as a result of a cyberattack on its Change Healthcare business.
In the first quarter of this year, adjusted earnings per share were $7.20 on revenue of $109.58 billion.
According to FactSet, analysts expect earnings of $7.29 per share on sales of $111.53 billion.
UnitedHealth now expects adjusted earnings per share to range between $26 and $26.50 in 2025. The Eden Prairie, Minnesota-based company initially projected earnings of $29.50 to $30 in December. It reaffirmed that outlook in January.
Analysts expect earnings of $29.72 per share.
Its shares fell 23% to $450.30 in afternoon trading. That weighed on the Dow Jones Industrial Average, which includes UnitedHealth.
The drop pushed the stock to its biggest one-day percentage drop since September 30, 1999, according to FactSet. Last November, the share price reached an all-time high of more than $630.
UnitedHealth is the first insurer to report quarterly results. Many see it as a sector indicator. Other insurers’ shares fell on Thursday, but none as sharply as UnitedHealth’s.
Elevance Health Inc., a competitor, said it does not expect any surprises when it reports its first quarter results later this month.
Blue Cross-Blue Shield provides Medicare Advantage coverage to more than 2 million people. It predicted on Thursday that first-quarter earnings would exceed Wall Street expectations.
“While cost trends in Medicare Advantage remain elevated, the (company’s) first quarter experience was consistent with its expectations and pricing,” Elevance, based in Indianapolis, said in a Securities and Exchange Commission filing.