UnitedHealth Group (UNH) earnings report Q2 2025

UnitedHealth Group on Tuesday issued a 2025 outlook that fell short of Wall Street’s expectations, as the company’s insurance unit continues to grapple with higher medical costs.

Shares of UnitedHealth Group fell nearly 4% in morning trading Tuesday.

The company anticipates it will post 2025 adjusted earnings of at least $16 per share, with revenue of $445.5 billion to $448 billion. Wall Street analysts had expected 2025 adjusted profit of $20.91 per share, and full-year revenue of $449.16 billion, according to consensus estimates from LSEG.

On top of higher medical costs, the updated outlook removes about $1 billion from “previously planned portfolio actions” that the company is no longer pursuing, UnitedHealthcare CEO Tim Noel said during an earnings call Tuesday. He did not provide specifics on those actions.

UnitedHealth Group said it expects to return to earnings growth in 2026.

The stock tumbled in May after the company suspended that 2025 guidance due to elevated medical costs and announced the abrupt departure of former CEO Andrew Witty. The report Tuesday adds to a growing string of setbacks for the company, which owns the nation’s largest and most powerful insurer, UnitedHealthcare, and is often viewed as the industry’s bellwether.

The company expects its insurance unit’s 2025 medical care ratio — a measure of total medical expenses paid relative to premiums collected — to come in between 89% and 89.5%. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability.

For the second quarter, that ratio increased to 89.4% from 85.1% during the year-earlier period, primarily because of medical costs. The company said health-care expenses during the quarter went up much faster than what it charged in premiums. On top of that, Medicare funding cuts also made things worse.

Analysts had expected that ratio to come in at 89.3% for the quarter, according to StreetAccount estimates.

UnitedHealth Group’s report signals that elevated medical costs in Medicare Advantage plans may not ease anytime soon for the broader health insurance industry. UnitedHealthcare, the insurance arm of UnitedHealth Group, is the nation’s largest provider of those privately run Medicare plans. 

Higher expenses in Medicare Advantage plans have dogged insurers over the past year as more seniors return to hospitals to undergo procedures they had delayed during the Covid-19 pandemic, such as joint and hip replacements.

“When we prepared our 2025 Medicare Advantage offerings back in the first half of 2024, we significantly underestimated the accelerating medical trend and did not modify benefits or plan offerings sufficiently to offset the pressures we are now experiencing,” Noel said during the call.

Noel said physician and outpatient care collectively represented 70% of the pressure on medical costs so far this year. But inpatient care also accelerated through the second quarter, and the company expects it will account for a “relatively large portion of the pressure” over the full year, he added.

UnitedHealthcare continues to see more patients use ER and observation stays, with more services being offered and bundled as part of each visit, Noel said.

Here’s what UnitedHealth Group reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $4.08 adjusted vs. $4.48 expected
• Revenue: $111.62 billion vs. $111.52 billion expected

The company posted net income of $3.41 billion, or $3.74 per share, for the quarter. That compares with net income of $4.22 billion, or $4.54 per share, during the year-earlier period.

Excluding certain items, adjusted earnings were $4.08 per share for the quarter.

UnitedHealth raked in $111.62 billion in revenue for the second quarter, up more than 12% from the same period a year ago due to growth within UnitedHealthcare and the company’s Optum unit. That segment includes Optum Health, which provides care and recommends providers, and pharmacy benefit manager Optum Rx.

Despite higher medical costs, UnitedHealthcare generated $86.1 billion in revenue for the second quarter, up 17% from the same period a year ago. Analysts expected UnitedHealthcare to book $84.89 billion for the period, StreetAccount estimates said.

While Optum Rx revenue jumped nearly 19% to $38.46 billion, Optum Health’s second-quarter revenue fell 7% year over year to $25.21 billion. The company’s ownership of an insurer, a pharmacy benefit manager and care providers has allowed it to dominate the industry, but the decline in Optum Health has drawn Wall Street’s attention.

“We know Optum’s performance has not met expectations. We are refocused on fundamental execution to ensure we meet our potential to help make the health system work better for everyone,” said Dr. Patrick Conway, Optum’s CEO, in the release.

The company expects the overall Optum unit to rake in 2025 sales of $266 billion to $265.7 billion.

Notably, the report comes just days after UnitedHealth revealed it is complying with Department of Justice investigations into its Medicare billing practices. 

Noel on Tuesday said the company is expanding its efforts to monitor its business practices and prevent extra costs for consumers.

“We have stepped up our audit, clinical policy and payment integrity tools to protect customers and patients from unnecessary costs,” he said, adding that the company is using AI tools to improve patient and provider service experiences and save costs.

During the earnings call, UnitedHealth Group’s new CEO, Stephen Hemsley, acknowledged that the company and other insurers face “continuing public controversy over long-standing practices.”

He added that beyond the “environmental factors” affecting the entire sector, “we have made pricing and operational mistakes, and others as well. “

“They are getting the needed attention. Our critical processes, including risk status, care management, pharmaceutical services and others are being reviewed by independent experts and they will be reviewed every year and reported on,” he said. “And these processes can be reviewed at any time by outside stakeholders.

Those experts include Analysis Group and FTI Consulting, Hemsley said. He added that the company expects the review to be completed by the end of the third quarter this year, with plans to release a first report on the findings in the fourth quarter.

“While we believe in our oversight and the integrity of these processes, wherever they are determined to be at variance with prescribed practice, they will be promptly remediated and we will continue on this path,” he added.

It marks UnitedHealth’s first earnings report under Hemsley, who is tasked with restoring investor confidence and turning around a struggling company that has continued to draw heavy public scrutiny in recent months. Shares of UnitedHealth Group are down more than 44% for the year, fueled in part by the DOJ’s investigations and its suspended outlook. 

The company’s 2024 wasn’t any better. It grappled with the murder of UnitedHealthcare’s CEO, Brian Thompson, the torrent of public blowback that followed and a historic cyberattack that affected millions of Americans.