UnitedHealth Group reported its fourth quarter earnings on Thursday, revealing mixed results that sent shares downward in early trading despite beating profit expectations. The healthcare giant posted adjusted earnings per share of $6.81, representing a 10.6% increase year-over-year and exceeding Wall Street estimates by 9 cents. However, revenues came in slightly below expectations at $100.8 billion, showing a 6.4% increase but falling short of analysts’ projected $101.76 billion.
The company’s Optum division, which employs approximately 90,000 physicians and serves as the primary earnings driver since its 2011 acquisition, demonstrated strong performance with revenues climbing 9.4% to reach $65.1 billion compared to the previous year.
A concerning trend emerged in the company’s medical-cost ratio, which increased by more than 2 percentage points to 85.5% throughout 2024, indicating higher insurance claim payouts relative to premium collections. While premium revenue grew by 4.5% to $74.5 billion in the fourth quarter, medical costs surged by 7.7% to $67.04 billion.
Looking ahead, UnitedHealth maintained its previous guidance for 2025, projecting full-year earnings between $29.50 and $30 per share, with operations expected to generate cash flow between $32 billion and $33 billion. CEO Andrew Witty expressed confidence in the company’s direction, emphasizing their commitment to expanding access to affordable healthcare while simplifying the system for both patients and providers.
The company continues to grapple with the aftermath of a tragic incident involving the murder of UnitedHealthcare CEO Brian Thompson, who was fatally shot outside a Manhattan hotel while en route to an investor conference. The suspect, 26-year-old Luigi Mangione from Maryland, faces charges related to what prosecutors describe as a methodically planned attack. This incident has contributed to mounting criticism of health insurance companies and pharmacy benefit managers’ roles in the American healthcare system.
Adding to the industry’s challenges, the U.S. Federal Trade Commission recently leveled accusations against the three largest pharmacy benefit managers, claiming they artificially inflated medication prices for serious conditions including heart disease, cancer, and HIV, allegedly resulting in over $7.3 billion in excess profits.
The earnings report’s impact was immediately reflected in the market, with UnitedHealth shares declining 3.4% in premarket trading, pointing to an opening price of $525.05. The company’s market value has suffered significantly since Thompson’s murder in early December, with losses exceeding $63 billion.
The healthcare sector faces increased scrutiny regarding coverage policies and pricing practices, particularly in light of recent developments. UnitedHealth’s latest financial results highlight the delicate balance between maintaining profitability and addressing growing concerns about healthcare accessibility and affordability in the United States.
The company’s premium revenue growth, while positive, has been outpaced by rising medical costs, reflecting broader challenges within the healthcare insurance industry. Despite these headwinds,
UnitedHealth Group maintains its position as a leading healthcare services provider, though it must navigate an increasingly complex landscape of regulatory oversight, public sentiment, and operational challenges.