TLDR
- UnitedHealth Group (UNH) stock fell over 3% in pre-market trading after reporting mixed Q2 earnings with revenue beat but EPS miss
- Company reported $111.6 billion in revenue versus $111.53 billion expected, but adjusted EPS of $4.08 fell short of $4.59 estimate
- Medical expense ratio hit historic high of 89.4%, the worst in company history, due to higher patient care utilization
- Full-year guidance disappointed with adjusted EPS of “at least” $16 versus analyst expectations of $20.64
- Stock has dropped 50% over past 12 months following various company setbacks including leadership changes and cyberattack
UnitedHealth Group stock tumbled more than 4% in pre-market trading Tuesday after the healthcare giant delivered mixed second-quarter results. The company beat revenue expectations but fell short on earnings per share.
The health insurer reported revenue of $111.6 billion, slightly above Wall Street’s forecast of $111.53 billion. However, adjusted earnings per share came in at $4.08, missing the expected $4.59 by a wide margin.
Revenue climbed nearly $13 billion compared to the same quarter last year. But margins tell a different story, shrinking from 4.3% in 2024 to just 3.1% this quarter.
UnitedHealth Group, $UNH, Q2-25. Results:
📊 Adj. EPS: $4.08 🔴
💰 Revenue: $111.6B 🔴
📈 Net Income: $3.41B
🔎 Q2 impacted by $1.2B in unfavorable discrete items, but revenue climbed to $111.6B on strength in UnitedHealthcare and Optum. pic.twitter.com/jt0he90K6Q— EarningsTime (@Earnings_Time) July 29, 2025
The company’s medical expense ratio reached 89.4% in the second quarter. This represents the highest level in UnitedHealth’s history, breaking the previous record of 85.5% set in 2024.
This ratio measures how much of collected premiums the company pays out for medical expenses. Insurers typically aim to keep this between 80% and 85%.
Rising Medical Costs Hit Bottom Line
Medical costs “exceeded pricing trends” during the quarter, according to company statements. More patients seeking care means higher payouts and reduced revenue for health insurers.
The 89.4% ratio compares unfavorably to 84.8% in the first quarter. The jump reflects increased utilization of healthcare services, particularly among Medicare patients.
Other major insurers have reported similar challenges this quarter. CVS saw its Aetna Medicare costs come in higher than expected, while Centene and Elevance faced comparable pressures.
UnitedHealth isn’t alone in struggling with these industry-wide cost pressures. The trend has affected multiple healthcare stocks throughout 2025.
Guidance Disappoints Wall Street
The company reinstated full-year guidance after pulling it completely in May. UnitedHealth now expects revenue between $445.5 billion and $448.0 billion for 2025.
Adjusted earnings guidance of “at least” $16 per share fell well short of analyst expectations. Wall Street had been looking for guidance closer to $20.64 per share.
The previous guidance, withdrawn in May, had called for earnings between $26 and $26.50 per share. The dramatic reduction reflects the challenging operating environment.
UnitedHealth expects to return to earnings growth in 2026 but provided no specific growth targets. Management commentary on Wednesday’s earnings call could provide more clarity on future prospects.
Stephen Hemsley, who returned as CEO after Andrew Witty’s departure in May, acknowledged the company’s focus on rebuilding. “UnitedHealth Group has embarked on a rigorous path back to being a high-performing company,” he stated.
The company has faced multiple challenges beyond rising medical costs. A cyberattack on its Change Healthcare subsidiary marked the largest such incident in healthcare history.
Leadership changes followed internal struggles and external pressures. The insurance industry has faced increased scrutiny over prior authorization practices that can delay or deny patient care.
Humana announced plans to reduce prior authorizations by one-third of current volume. UnitedHealth previously stated that prior authorizations affect only 2% of total claims and pledged further reductions.
UnitedHealth stock has fallen 50% over the past 12 months. The company continues working to rebuild investor confidence while addressing operational challenges.
The earnings call scheduled for 8 a.m. Eastern time Wednesday may provide additional insight into management’s turnaround strategy. Analysts will likely focus on 2026 growth expectations and cost control measures.
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