UnitedHealth Group Reports Q1 2025 Results, Revises Down Full-Year Outlook, Shares Crash 22%

UnitedHealth Group (UNH) reported its first-quarter 2025 results on April 17, 2025, revealing strong revenue growth but a lower-than-expected performance, leading to a revision of its full-year earnings guidance. While revenues reached $109.6 billion, a $9.8 billion increase year-over-year, the company’s adjusted earnings per share (EPS) of $7.20 fell short of some expectations. Consequently, UnitedHealth Group has revised its adjusted EPS outlook for 2025 to $26 to $26.50, down from the previous guidance of $29.50 to $30.00.

According to CEO Andrew Witty, the revised outlook stems from two primary factors impacting their Medicare businesses: higher-than-anticipated care activity in UnitedHealthcare’s Medicare Advantage business and unforeseen changes in the profile of Optum Health members. The increase in care activity was most notable within physician and outpatient services. For Optum Health, new Medicare patients generated less revenue than expected due to being higher risk than anticipated.

Performance across UnitedHealth Group’s segments was varied. UnitedHealthcare’s revenues grew to $84.6 billion, with operating earnings of $5.2 billion, impacted by the higher care activity in Medicare Advantage. Despite this, their Medicare Advantage business is still projected to serve an additional 800,000 people this year. Optum’s total revenues reached $63.9 billion, with Optum Rx showing strong growth of 14%. However, Optum Health’s operating income saw a decline, attributed to the member profile changes and the transition of some risk-based arrangements to fee-based models. Optum Insight experienced revenue growth and saw success with new AI-powered claims efficiency tools.

The market reacted negatively to the news, with shares reportedly falling significantly in early trading. Analyst Julie Utterback from Morningstar noted the weak first quarter and lowered the firm's 2025 adjusted EPS view. Consequently, Morningstar reduced its fair value estimate for UnitedHealth Group by 10% to $530 per share, viewing the shares as fairly valued at the revised price. Similarly, Wells Fargo Securities analysts Stephen Baxter and team acknowledged the EPS guidance cut as a material setback, though they maintain an Overweight rating with a price target of $677.00, based on their 2026 EPS estimate. They see the current challenges, particularly within Optum Health, as potentially specific to UnitedHealth.

Despite the current headwinds, UnitedHealth Group maintains its focus on long-term growth and is taking steps to address the identified issues, including improving physician clinical workflows and informing 2026 plan designs with current trends. The company reaffirms its consolidated revenue outlook of $450 to $455 billion for the year, with stronger performance expected from UnitedHealthcare and Optum Rx partially offsetting the reduced outlook for Optum Health. While the first quarter presented unexpected challenges, UnitedHealth Group aims for a return to its expected performance in the quarters ahead.

Company Description

UnitedHealth Group, Inc. provides health care coverage, software, and data consultancy services. It operates through the following segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The UnitedHealthcare segment utilizes Optum's capabilities to help coordinate patient care, improve the affordability of medical care, analyze cost trends, manage pharmacy benefits, work with care providers more effectively, and create a simpler consumer experience. The OptumHealth segment provides health and wellness care, serving the broad health care marketplace, including payers, care providers, employers, government, life sciences companies, and consumers. The OptumInsight segment focuses on data and analytics, technology, and information to help major participants in the healthcare industry. The OptumRx segment offers pharmacy care services.

Economy Advantage & Regulatory Risks

UnitedHealth Group possesses a narrow economic moat supported by cost advantages and network effects derived from its diversified business model. Its leading position in U.S. medical insurance allows for strong negotiation with healthcare suppliers due to local scale. Optum Rx, the pharmacy benefit manager, benefits from client switching costs and network effects, demonstrated by high retention rates and growing market share. Optum Health's outpatient services gain from reputational intangible assets, aligning incentives between insurance operations and providers. Furthermore, Optum Insight leverages extensive data to offer healthcare IT solutions, creating customer switching costs. However, the company faces risks from potential regulatory changes, especially concerning Medicaid and the PBM industry, which could negatively impact its economic profitability. Additional risks stem from controversies over coverage decisions and risk ratings within Medicare Advantage.