April 21, 2025

UnitedHealth execs bemoan ‘unusual and unacceptable’ Q1 financials

Shares of UnitedHealth Group dived Thursday after the insurer reported weak first-quarter earnings and slashed its outlook for the remainder of 2025.

“It is an outlook that I’m extremely disappointed to share with you,” said John Rex, chief financial officer. “This reflects the profile of patients served at Optum Health. It also reflects significantly increased care activity across the UnitedHealthcare Medicare Advantage plans.”

UnitedHealth shares closed down nearly $131 a share, or 22%. The stock market closed Friday for Good Friday observance.

In what CEO Andrew Witty termed, “unusual and unacceptable,” the earnings miss is UnitedHealth’s first since 2008. Two factors drove the downturn, Witty explained: care activity and member profiles.

UnitedHealth Group is comprised of two main companies: Optum Health and UnitedHealthcare. Both have unique difficulties, Witty said.

Continued effects of funding cuts for Medicare plans implemented under the Biden Administration are affecting Optum’s bottom line. Optum, which includes the prescription drug plans it runs for Medicare, also faced pressure from patients who required more care.

“Optum’s Medicare business is multipayor and not limited to just UnitedHealthcare members,” Witty said. “Given these differences, changes in care activity and member profiles do not always follow the same patterns, and can result in different impacts to each business. The respective teams are urgently responding to our performance challenges.”

Twice the patient level

UnitedHealthcare had projected 2025 care activity within its Medicare Advantage business to repeat 2024 levels, Witty explained.

“Instead, though first quarter 2025, indications suggest care activity increased at twice that rate,” Witty said. “Increases in physician and outpatient services were most notable, and inpatient to a lesser extent.”

UnitedHealthcare’s Medicare Advantage business is on pace to serve an additional 800,000 people this year, Witty said. Optum is expected to add 650,000 net new patients to “value-based care arrangements.”

But in the first quarter, those new patients did not translate as expected, Witty said.

“They experienced a surprising lack of engagement last year, which led to 2025 reimbursement levels well below what we would expect and likely not reflective of their actual health status,” Witty said. “Additionally, many of the current and new complex patients we serve are more affected by the CMS risk model changes that we are in the process of implementing. To be sure, it is complicated, but we are not executing on the model transition as well as we should.”

The disappointing quarter follows a turbulent end to 2024 that saw UnitedHealthcare CEO Brian Thompson murdered by a disgruntled Luigi Mangione on Dec. 4. The attack took place outside the New York Hilton Midtown, where UnitedHealth Group was hosting an investor event.

UnitedHealth’s disappointing results from its Medicare Advantage business might be a warning sign for the entire industry, according to some Wall Street analysts.

The private insurance alternative to traditional Medicare, Medicare Advantage is now the choice of more than half of Medicare enrollees. And it’s expected to continue to grow.

While most enrollees are satisfied with their plans, MA faces mounting criticism for denying and delaying some needed care while costing taxpayers billions more than government-run, so-called fee-for-service, traditional Medicare, Kiplinger reported in a January story.

Witty vows to fix it

Witty outlined five steps UnitedHealth is taking to improve its financial results:

The complex patients most impacted by the previous administration’s Medicare funding cuts are being routed to clinical and value-based programs.
Secondly, “we are consistently engaging with members in their homes and in post-discharge settings. Engagement remains the key,” Witty said.
The insurer is “appropriately assessing and updating the health status of new patients,” he said, especially those at high risk levels.
To more effectively transition to the new CMS risk model, UnitedHealth is “investing significantly” in improving physicians’ clinical workflow to help ensure better care and timely insights on when and where care is most efficient and effective.
Finally, Medicare Advantage plan designs and pricing for 2026 “will be fully informed by these trends,” Witty said.

“While we are decidedly unsatisfied with these results, our growth and foundation for improvement remains solid,” Witty concluded.

Amid the fallout from the Thompson murder, UnitedHealth drew criticism from patients and advocates for its high claim denial rate. The insurer went on a public relations offensive that continued with Witty’s prepared remarks Thursday.

“Our team continues to innovate to make accessing care easier,” Witty said. “For example, our newest tools have sparked a more than 40% increase in digital engagement among our senior members through the first quarter.

“We see evidence of this in sharply higher and earlier wellness visits to their primary care physicians … with total visits in the first quarter running far above the year-ago period.”

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