Investors brace for UnitedHealth’s 2025 outlook following executive's murder

Analysts and investors are eagerly awaiting details on UnitedHealth Group's 2025 outlook as the company prepares to report its quarterly results on Thursday.

This comes after the cancellation of its investor day last month, following the tragic murder of executive Brian Thompson outside a New York hotel, where the meeting was scheduled to take place, News.Az reports, citing Reuters.

The company in a press release on Dec. 3 said it was expecting a profit of $29.50 to $30 per share, which was in line with Wall Street expectations.

The murder unleashed a social media storm of patient dissatisfaction and ire over the health insurance industry's practices that raised questions about whether UnitedHealth would come under pressure to change how it operates.

"I think at one level people are just looking for them to express confidence in the outlook, and what are some of the puts and takes there of significance," said UBS analyst AJ Rice.

"Hearing more about the two challenging areas - Medicare and Medicaid - will be important underpinnings for feeling confident about that outlook," Rice added.

The health insurance industry has been grappling with high medical costs for over a year, particularly in government Medicare plans for older adults or those with disabilities as many people sought treatment delayed during the COVID-19 pandemic.

The issue extended in 2024 to Medicaid, which serves people with low income, with plans experiencing higher usage than budgeted, said Morningstar analyst Julie Utterback.

As states re-determined eligibility for their Medicaid plans, healthier members fell off the rolls, leaving behind those who require more medical services.

"We expect the Medicaid mismatch in rates and utilization to constrain profit growth through most of 2025," Utterback said.

Regulatory risks for the industry also may increase, with lawmakers focused on pharmacy benefit managers and their role in high drug costs. UnitedHealth's Optum is one of the nation's largest PBMs.

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 UnitedHealth shares.

"It'll still be in the minds of folks that view these companies as villains, but all the companies can do is just continue to operate, beat numbers and continue to give cash back to shareholders," Harlow said.

News.Az