UnitedHealth Group (NYSE:UNH) on Thursday reported first-quarter 2025 earnings and revised 2025 guidance.

The insurance giant reported adjusted EPS of $7.20, up from $6.91 a year ago, missing the consensus of $7.29. Revenues increased 6.8% year over year to $109.6 billion, missing the consensus of $111.60 billion.

“UnitedHealth Group…did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead and return to our long-term earnings growth rate target of 13 to 16%,” said Andrew Witty, chief executive officer of UnitedHealth Group.

The first quarter medical care ratio was 84.8% compared to 84.3% in 2024.

• The increase was primarily due to the revenue effects of the ongoing Medicare funding reductions and member mix and the higher senior care activity, partially offset by the Medicare Part D program changes, which affected seasonality.
• The company did not reflect any favorable earnings impacting medical reserve development in the quarter.

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UnitedHealthcare’s first-quarter revenues of $84.6 billion grew by $9.3 billion year over year. Operating earnings were $5.2 billion, impacted by higher-than-expected care activity levels within its Medicare Advantage business.

• The number of consumers served with self-funded commercial benefits increased by about 700,000. Commercial insured membership was impacted by attrition within individual exchange offerings due to a highly price-competitive marketplace.
• The number of people served by the company’s offerings for seniors and people with complex needs grew by 545,000 and is expected to reach 800,000 in 2025.
• People served by the company’s state-based community plans increased to 7.6 million members.

Optum’s first quarter revenues of $63.9 billion increased by $2.8 billion, led by Optum Rx. Operating earnings were $3.9 billion.

• Optum Health’s revenues were $25.3 billion, and it expects to serve 650,000 new value-based care patients in 2025.
• Optum Insight revenues were $4.6 billion and the revenue backlog was $32.9 billion.
• Optum Rx revenues were $35.1 billion, with strong growth driven by new clients and expanded relationships with existing clients. Adjusted scripts grew to 408 million, compared to 395 million last year.

Guidance: UnitedHealth Group cuts its 2025 performance outlook. It expects adjusted earnings of $26.00-$26.50 per share versus prior guidance of 29.50-$30.00 versus consensus of $29.73, reflecting:

• Heightened care activity indications within UnitedHealthcare’s Medicare Advantage businesses became visible as the quarter closed, far above the planned 2025 increase consistent with the elevated levels in 2024.This activity was most notable within physician and outpatient services.
• Unanticipated changes in the profile of Optum Health members impacting planned 2025 reimbursement due to unexpectedly minimal 2024 beneficiary engagement by plans exiting markets. In addition, a greater-than-expected impact to current and new complex patients from the ongoing Medicare funding reductions enacted by the previous administration.

Price Action: UNH stock is down 20.50% at $465 during the premarket session on the last check Thursday.

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