UnitedHealth investors await details behind 2025 outlook after CEO’s assassination Reuters
Sriparna Roy and Amina Niasse
(Reuters) – Analysts and investors are awaiting details behind UnitedHealth Group’s (NYSE: ) 2025 outlook when it reports quarterly results on Thursday, after its investor day presentations were canceled last month due to the killing of CEO Brian Thompson outside a New York hotel where the meeting was to be held.
The company said in a Dec. 3 press release that it expects earnings of $29.50 to $30 per share, in line with Wall Street expectations.
The killing sparked a storm of patient dissatisfaction and anger on social media over health insurance industry practices that have raised questions about whether UnitedHealth will be pressured to change the way it operates.
“I think at one level people are just looking for them to express confidence in the outlook and what the significant views and positions are,” said UBS analyst AJ Rice.
“Hearing more about the two challenging areas — Medicare and Medicaid — will be an important basis for feeling confident about those prospects,” Rice added.
The health insurance industry has been grappling with high medical costs for more than a year, particularly in state-run Medicare plans for the elderly or those with disabilities as many people have sought delayed treatment during the COVID-19 pandemic.
In 2024, the problem spread to Medicaid, which serves low-income people, with plans experiencing higher-than-expected use, said Morningstar analyst Julie Utterback.
As states redefined eligibility for their Medicaid plans, healthier members dropped off the rolls, leaving behind those who needed more medical services.
“We expect the Medicaid mismatch in rates and utilization to limit profit growth through much of 2025,” Utterback said.
Regulatory risks to the industry could also increase, as lawmakers focus on pharmacy benefit managers and their role in high drug costs. UnitedHealth’s Optum is one of the largest PBMs in the country.
UnitedHealth will likely face questions about its business practices and the potential for regulatory or consumer backlash, said James Harlow, senior vice president at Novare Capital Management, which owns more than 46,000 shares of UnitedHealth.
“People will continue to see these companies as villains, but all the companies can do is just keep doing business, beat the numbers and keep returning money to shareholders,” Harlow said.
COST TRENDS
More broadly for insurers, the focus will remain on enrollment and cost trends, which will impact the outlook for 2025 and each company’s ability to meet its margin goals, JP Morgan analyst Lisa Gill said in a note.
The expiration of enhanced tax credits that subsidize the cost of health plans for millions of Americans under the Affordable Care Act, popularly known as Obamacare, has been extended to 2025 but could be in jeopardy under President-elect Donald Trump, who takes office in January. 20.
Barclays (LON: ) Analyst Andrew Mok sees a 50%-75% chance the new administration will let those credits expire this year, leading to a 15% to 20% drop in Obamacare enrollment by 2026. Obamacare plans are sold through the feds and government online exchanges.
“Medicare Advantage probably has a slightly more favorable background once the Trump administration is fully in place. The question marks tend to be around the public exchanges and to a lesser extent around Medicaid,” UBS’s Rice said.
Analysts expect UnitedHealth to report fourth-quarter earnings of $6.72 per share on revenue of $101.76 billion on Thursday, according to LSEG.
UnitedHealth shares have fallen 11% since Dec. 4, the day Thompson was killed, to around $543. They grew by almost 5% compared to last year.
