UnitedHealth shares fell nearly 5% Thursday morning after the company disclosed lower-than-expected earnings in its first earnings report since the shocking assassination of UnitedHealth insurance chief executive Brian Thompson. .
The insurer reported fourth-quarter revenue of $100.81 billion, below expectations of $101.76 billion, impacted by lower-than-expected premiums.
UnitedHealth reported adjusted net income per share of $6.81 for the quarter, beating expectations of $6.72 per share.
The company maintained its 2025 adjusted net income forecast at $29.50 to $30 per share.
Thompson, 50, was executed at close range outside the Hilton in midtown Manhattan on December 4 while on his way to host an investor conference.
A grand jury indicted 26-year-old Luigi Mangione on charges of first-degree murder and two counts of second-degree murder.
The assassination appears to have been prompted by anger over the insurance industry, its high premiums, and the denial of claims.
Social media users made twisted jokes about the killing, siding with the killer and claiming it was revenge against an insurance company that refused to cover his loved one's medical treatment.
Rising medical costs in government-backed Medicare plans hit the health insurance industry hard last year.
In early 2024, health insurance companies realized that profits from Medicare Advantage plans would decline as older Americans who delayed treatment during the pandemic began seeing doctors.
Major insurance companies such as Humana and Aetna derive most of their revenue from this popular Medicare plan.
In fiscal year 2024, a whopping 26% of UnitedHealth's revenue came from its Medicare division. According to Trefis' estimationa data analytics company led by MIT engineers and Wall Street analysts; Regular contributor to Forbes magazine.
Medicare Advantage offers more benefits than traditional Medicare, such as gym memberships. Insurance companies were able to collect higher reimbursements For customers eligible for this popular plan. But the return of older Americans to medical visits has weighed on insurers, as increased usage reduces profits.
According to LSEG data, UnitedHealth's medical expense ratio (the percentage of premiums spent on medical care) was 87.6%, higher than expectations of 85.95%. Insurers typically aim for a ratio of 80%.
“This shows that this problem is far from over, and some investors are looking ahead to 2025 with a better outlook,” said James Harlow, senior vice president at Novare Capital Management, which owns the company's stock. I was hoping that we might see a trend.”
The company said it expects the medical expense ratio to reach about 86-87% this year.
“The market seems disappointed that this archetypal overachiever only achieved his 2024 goal and kept his lackluster 2025 outlook intact,” said Morningstar analyst Julie Utterback. ” he said.
Shares of rivals CVS Health and Elevance Health also fell about 3% on Thursday.
with post wire
