Activity and Member Profile Surprises Sting United Outlook, Stock
A costly spike in activity from Medicare Advantage patients and lower-than-expected revenues from a cohort of new value-based care plan members led to UnitedHealth Group Inc. posting disappointing first-quarter results and needing to slash its forecast for all of 2025.
Speaking with analysts after reporting earnings, CEO Andrew Witty and his team said they were surprised by how much MA patients used the medical system early this year. Tim Noel, CEO of UnitedHealthcare, said the growth in activity was double what his team had expected, including in seeking out preventative care.
“That in and of itself really not the trend driver, but it’s the follow-on care that is more than what we have anticipated,” Noel said. “That constitutes specialist visits, physician specialist visits as well as some other outpatient services.”
A key factor in the rise in activity, Noel and Witty said, is MA funding cuts of recent years that have spurred insurers to raise their group rates.
“That is now driving a different behavior from group members and that’s what we’ve picked up in this area,” Witty said. “We need to do a better job of being able to predict and anticipate the second- and third-order effects when they come but they are direct consequences of this transition.”
In value-based care, which United houses in its Optum Health division, executives were surprised early this year by the low reimbursement levels of many new members because they had not engaged regularly with their former plans. Those lower profiles, Witty said, were unexpected “and likely not reflective of their actual health status.”
The first-quarter results led United executives to lower their profit outlook for all of 2025 by about 12 percent and raise their forecast for United’s medical care ratio by a percentage point to about 87.5 percent. The news slammed United shares (Ticker: UNH), which lost 22 percent April 17, wiping out about $120 billion in value.
Witty said the issues facing United are “highly addressable” and said the company has stepped up its engagement work in patients’ homes and after their discharge. Among other things, it also has started to update the health status of new value-based care members. The 2025 growth goals of adding 800,000 people in Medicare Advantage and 650,000 net new patients in Optum Health remain on track, he said, and recent word from CMS that MA plans will get a boost to their benchmark payment rate also will help address some of the issues.
Another strategy is one other carriers have also used plenty in recent years: “Our Medicare Advantage plan designs and pricing for 2026 will be fully informed by these trends,” Witty said.
