UnitedHealth Group’s 2025 Outlook Under Scrutiny
As UnitedHealth Group prepares to release its quarterly results on Thursday, investors and analysts are eagerly awaiting details on the company’s 2025 outlook. The anticipation follows the cancellation of its investor day presentations last month, which were marred by the tragic murder of executive Brian Thompson outside a New York hotel.
Profit Expectations and Industry Challenges
In a press release on December 3, UnitedHealth Group announced its expectation of a profit of $29.50 to $30 per share, aligning with Wall Street expectations. However, the health insurance industry has been grappling with high medical costs, particularly in government Medicare plans, as many people sought treatment delayed during the COVID-19 pandemic. This issue has extended to Medicaid, which serves people with low income, with plans experiencing higher usage than budgeted.
Medicare and Medicaid: Key Areas of Focus
UBS analyst AJ Rice emphasizes the importance of hearing more about the two challenging areas – Medicare and Medicaid – to feel confident about the outlook. Morningstar analyst Julie Utterback notes that the Medicaid mismatch in rates and utilization is expected to constrain profit growth through most of 2025. As states re-determine eligibility for their Medicaid plans, healthier members fall off the rolls, leaving behind those who require more medical services.
Regulatory Risks and Business Practices
The industry also faces regulatory risks, with lawmakers focused on pharmacy benefit managers and their role in high drug costs. UnitedHealth’s Optum, one of the nation’s largest PBMs, may come under scrutiny. James Harlow, senior vice president at Novare Capital Management, expects UnitedHealth to face questions about its business practices and the potential for regulatory or consumer backlash.
Enrollment and Cost Trends: Key to 2025 Outlook
J.P. Morgan analyst Lisa Gill highlights the importance of enrollment and cost trends, which will impact the 2025 outlook and the ability for each company to hit its margin targets. The expiration of enhanced tax credits that subsidize the cost of health plans for millions of Americans under the Affordable Care Act may also be at risk under the new administration.
Analyst Estimates and Market Performance
Analysts estimate UnitedHealth will report a fourth-quarter profit of $6.72 per share and revenue of $101.76 billion on Thursday. UnitedHealth shares have fallen 11% since December 4, but are up nearly 5% from a year ago. As the company navigates these challenges, investors will be closely watching its quarterly results and 2025 outlook.
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