UnitedHealth Group reported strong earnings for the last quarter of 2024, but rising medical costs and unexpected levels of care usage worried investors, leading to a drop in its stock price.
This earnings report is significant as it is the first since the tragic death of UnitedHealthcare CEO Brian Thompson, who was shot outside a Manhattan hotel in December. His death sparked discussions about healthcare access and the influence of insurance companies. During the earnings call, company executives honored Thompson, highlighting his contributions over more than two decades.
In the fourth quarter, the percentage of premium revenue used for patient care rose to over 87%, which was higher than analysts had predicted. This increase surprised many, including TD Cowen analyst Ryan Langston, who noted it was “well above” expectations. UnitedHealth attributed this rise to several factors, including more use of expensive specialty medications and cuts in reimbursements for its Medicare Advantage plans. The company also reported a loss of about 400,000 Medicaid enrollees due to slow updates from states on payment rates.
Despite these challenges, UnitedHealth posted adjusted earnings of $6.81 per share, exceeding Wall Street’s forecast of $6.73. However, its revenue of $100.8 billion fell short of the expected $101.6 billion. The company, based in Minnetonka, Minnesota, is the largest private health insurer in the U.S., covering over 49 million people and expanding into pharmacy benefits and health technology services.
For the entire year, UnitedHealth saw a 36% drop in net income to $14.4 billion, marking its first annual profit decline in nearly ten years. The company cited a cyberattack on its Change Healthcare unit earlier in 2024, which cost over $2 billion and caused significant operational disruptions.
The unexpected rise in medical expenses late last year had already alarmed the market, and the news of the cyberattack followed shortly after. The scrutiny on the health insurance industry intensified after Thompson’s death, with many Americans expressing concerns about insurance practices and profits.
UnitedHealth’s stock, which is part of the Dow Jones Industrial Average, saw a modest recovery in early 2025 but fell nearly 5% to $517.76 on Thursday. Other major healthcare companies, including CVS Health and Cigna, also experienced declines.