UnitedHealth posted weaker-than-expected second-quarter results on a jump in medical costs and gave a full-year earnings outlook as much as 22.5% below analysts' already downbeat estimates. UNH, the worst Dow Jones Industrial Average performer this year, continued to fall in early Tuesday stock market action.
The company said it's seeing "rapidly rising costs per patient encounter," the number, type and intensity of services all running "well beyond" expectations.
Medicare Advantage Premium Hikes
UnitedHealth is plotting a return to growth for 2026 in which premium hikes will play a large role. The company said it underpriced 2025 Medicare Advantage plans in 2025 for a 5% increase in medical costs that it now expects to be 7.5%. For 2026, its plan anticipates an acceleration to 10% cost growth.
"UnitedHealth Group has embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society broadly," said Stephen Hemsley, who stepped back in as CEO in May after Andrew Witty's abrupt resignation amid a string of earnings warnings. Hemsley added in the earnings statement that strengthened operating discipline is "positioning us for growth in 2026 and beyond."
UnitedHealth Earnings
Results: UnitedHealth posted Q2 adjusted earnings per share of $4.08, down 40% from a year ago and about 8% below analyst views. Revenue of $111.62 billion edged past estimates of $11.59 billion.
The results included recognition of $1.2 billion in future losses, about half of it tied to Affordable Care Act marketplace coverage. Q2 medical costs amounted to 89.4% of premiums, up 430 basis points from a year ago.
Outlook: The company said it expects adjusted EPS of at least $16 in 2025, down as much as 42% from a year ago and about 23% below current analyst views. Revenue is expected to range from $445.5 billion to $448 billion, up 11.5% at the midpoint, though just below analyst estimates near $449 billion.
The Big, Beautiful Health Care Squeeze Is Here. What That Means For Your Coverage.
Dow Jones Dividend Play
According to the Dogs of the Dow website, the crash in UNH stock of 44.4% year to date through Monday, is by far the worst among the 30 Dow Jones stocks, with Salesforce a distant second at -19.5%.
That has made UnitedHealth, which raised its quarterly dividend by 5% to $2.21 in June, the fourth highest-yielding Dow Jones stocks, with a yield of 3.15%.
Regulation and the federal investigation of potential Medicare Advantage overpayments due to inappropriate diagnoses pose risks for UnitedHealth. But for all of its troubles, the company still is strong financially.
Several other health insurers are struggling, including Medicare Advantaged-focused Humana and Medicaid-focused Centene and Molina Healthcare. Humana reports Q2 earnings Wednesday while Centene and Molina released results last week.
UNH Stock
UNH tumbled 7.5% to 261.07 in Tuesday stock market action.
UnitedHealth crashed to a five-year low of 248.88 after it pulled guidance on May 15, but that floor is holding, despite the incremental bad news. But UNH stock did set a new five-year closing low Tuesday.
Humana edged higher Tuesday while Centene and Molina fell. Are all at or near long-term lows as well.
