The healthcare behemoth’s stock selloff would reduce the Dow’s price by more than 120 points.
Early Thursday trading saw a steep decline in UnitedHealth Group Inc. shares as the healthcare behemoth revealed fourth-quarter revenue that fell short of forecasts.
Despite rising medical expenditures, the corporation exceeded profit projections and confirmed its 2025 earnings outlook, something it has done for at least the last five years.
In a brief statement, Chief Executive Andrew Witty stated that UNH is committed to making “high-quality, affordable healthcare more available to more people while making the health system easier to navigate for patients and providers.” Witty also mentioned the company’s concerns regarding rising medical costs and transparency in coverage.
The S&P 500 index’s SPX early decliners were led by the shares, which fell 3.7% in premarket trading.
The anticipated price drop would reduce the Dow Jones Industrial Average DJIA’s price by around 123 points. In recent trading, Dow futures (YM00) fell 86 points.
Revenue broke a 17-quarter record of revenue beats, up 6.8% from the previous year to $100.81 billion, but falling short of the FactSet forecast of $101.60 billion.
Optum, the company’s pharmacy-benefit management division, had a 9.4% growth in revenue to $65.1 billion. Revenue for the UnitedHealthcare division increased 4.7% to $74.1 billion.
From $5.46 billion, or $5.83 per share, to $5.54 billion, or $5.98 per share, net income increased.
Adjusted profits per share, excluding nonrecurring charges, exceeded the FactSet consensus of $6.73 and increased from $6.16 to $6.81. Based on available FactSet data, the company has exceeded EPS forecasts for at least 21 consecutive quarters.
The company continues to project adjusted EPS of $29.50 to $30.00 and revenue of $450 billion to $455 billion in 2025.
The medical-care ratio, or the proportion of premium dollars spent on services (the lower the better), rose from 83.2% in 2023 to 85.5% for the entire year. That was higher than the 85.1% FactSet consensus.
During the post-earnings call with analysts, UnitedHealth management will undoubtedly face a lot of questions from Wall Street regarding the political environment and growing expenses. At 8:45 a.m. Eastern time, the call is expected to begin.
Following the death of Brian Thompson, the head of the UnitedHealthcare division, and the public uproar over insurance denials, the corporation is at a turning point. As a result, UnitedHealth CEO Andrew Witty wrote that there was a need “to improve how we explain what insurance covers and how decisions are made.”
Furthermore, pharmacy-benefit managers—whom politicians refer to as “drug middlemen”—are under increasing political pressure.
Erin Wright, an analyst at Morgan Stanley, commented, “Any ideas on PBM reform and other possible regulation floating around D.C. from management would be helpful to us on the outside looking in.”
