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Unitedhealth (Oneh-1.96%) shocked investors on Thursday by reducing their profit forecasts in 2025 – and offering a diagnosis that gives thought: older Americans use more health care than expected, and the government pays less to cover it.
The insurance giant lowered its orientations on the profits adjusted in anterior year to $ 26 to $ 26.50 per share, against $ 29.50 to $ 30. It is a major revision for one of the most stable companies in the industrial average of Dow Jones – and it has sent a shares from Unitedhealth plunges almost 20% in the morning trade. This contributed to dragging the DOW down 437 points, or about 1.1%, even if the S&P 500 and the Nasdaq checked.
Vertical integration causes a bite at all levels
At the heart of the Miss is the Medicare Advantage company of United, where the company offers private insurance plans for the elderly. In the first quarter, patients flooded ambulatory care – routine doctor visits, diagnostics, non -urgent treatments – at much higher than expected levels. Since Medicare Advantage works on fixed payments, this increase in use has stretched at the beneficiary margins.
But the real bite?
United was tight on both sides of its activities. As an anterior (via unitedhealthcare), the company had to deal with medical costs. And as a supplier (via his health clinics and his Optum care teams), he saw the decent reimbursements – due to behavior of unexpected patients and continuous medicare financing cuts.
In short: United has paid more and was paid less.
“We did not succeed in our expectations,” said CEO Andrew Witty. “But we are aggressively these challenges.”
When safe bets stumble, the entire index feels it
The sale shows how fragile confidence is in an uncertain political environment. The stumbling of Unitedhealth just lands a day after the Dow Nvidia’s component (Nvda+ 0.54%) 7% diving and indicates that no part of the market – even the biggest names – is immune to the training effects of the increase in health costs, policy changes and unpredictable trends of use.
And Thursday, for the DOW, where United is a heavyweight, the fallout strike even harder.
