UnitedHealth Group’s stock has plummeted 20% after slashing its annual profit forecast due to higher-than-expected medical costs in its Medicare plans. The move may be a warning sign for other companies with similar business models.
Higher medical costs have been a challenge for the entire insurance industry, particularly among seniors who are returning to hospitals for procedures they had delayed during the pandemic. However, the issue has previously not been as significant at UnitedHealthcare.
Analysts say that UnitedHealth’s problems may be less of an issue for companies that exited unprofitable Medicare Advantage markets. On the other hand, those that gained greater market share could be more affected by rising medical costs.
The company reported “ominous signs” of accelerating medical costs in its Medicare Advantage businesses. This trend was unexpected and has raised concerns among analysts. The industry’s response to this trend is still uncertain.
Source: https://www.cnbc.com/2025/04/17/unitedhealths-guidance-cut-may-mean-trouble-for-more-insurers.html