The course of the action of Unitedhealth Group fell by around 23% in the Midi Trade after the company cut its profit prospects for the year due to a surprising leap in medical costs.
A complex mixture of health care problems has led a simple and painful result for investors while the actions of the health care giant based on Eden Prairie fell, erasing nearly $ 120 billion in market capitalization from the business value.
It was the greatest drop in one day in the United Strands of Unitedhealth since the 1990s, when it was a much smaller business.
“We must and we will execute to better anticipate and approach these factors,” said Andrew Witty, managing director of the United Group, during a Thursday call with investors. He described the performance of the “unusual and unacceptable” company.
Medicare Advantage patients used more care than expected in the first three months of the year, a leap that harms the financial results of the first quarter to the company’s Unitedhealthcare division, which is the largest health insurer in the country.
Meanwhile, the dynamics extended to its Optum Health Services activity, which manages a network of clinics and surgery centers across the country.
New Medicare Patients in Optum health care providers have generated less income than expected because the medical coding previously submitted to the government did not reflect their whole range of health problems, company officials said. The problem was aggravated by a new tightening by health insurance of funding based on risk for insurers.
“There is no doubt that it was a big surprise,” wrote John Boylan, analyst at Edward Jones, in a research note. “We, and probably other investors, think (d) that United has properly taken into account higher care costs in its 2025 insurance rates after seeing much higher costs than normal in 2024. It is clear that this was not the case, because the costs remain high.”
