UnitedHealth Group Reports Mixed Results in Q1 2025: A Reckoning for the Healthcare Giant
UnitedHealth Group, one of the largest health insurance companies in the US, has reported a mixed set of results for the first quarter of 2025. On the surface, it appears that the company's performance was strong across its various businesses, with growth in membership and services provided to more members and patients. However, beneath this veneer lies an unusual and unacceptable outcome that has prompted the company to revise its adjusted earnings per share (EPS) outlook for the year.
According to Andrew Witty, Chief Executive Officer of UnitedHealth Group, the company's performance was impacted by two broad factors in its Medicare businesses: care activity and member profiles. In a conference call held on April 17, 2025, Witty acknowledged that the company had planned for care activity in its Medicare Advantage business to increase at a rate consistent with the utilization trend seen in 2024. However, this expectation was shattered when first-quarter 2025 indications suggested care activity increased at twice that rate.
Increases in physician and outpatient services were most notable, while inpatient services were affected to a lesser extent. Notably, these changes in care activity were limited to the company's Medicare Advantage business, with its commercial or Medicaid businesses performing as expected. The implications of this sudden increase in care activity are significant, particularly given that it was not anticipated by the company.
Furthermore, Witty revealed that unanticipated changes in Optum's Medicare membership have impacted 2025 revenue. Specifically, the company added more new Medicare patients to Optum Health, some of whom were covered by plans that exited markets. These patients experienced a surprising lack of engagement last year, leading to 2025 reimbursement levels well below what was expected and likely not reflective of their actual health status.
In addition to these challenges, many of the current and new complex patients served by the company are more affected by CMS risk model changes that are being implemented. While the company is investing significantly in improving physician clinical workflow to ensure better care and timely insights on when and where care is most efficient and effective, it must also work to address the complexities surrounding these changes.
Despite these challenges, UnitedHealth Group remains confident in its ability to address them. The company has outlined a series of measures to mitigate the impact of these factors, including ensuring complex patients engage in clinical and value-based programs; consistently engaging with members in their homes and post-discharge settings; assessing and updating the health status of new patients, especially those at high risk levels; and investing in improving physician clinical workflow.
While UnitedHealth Group's revised adjusted EPS outlook for the year has been reduced to $26 to $26.50, the company remains committed to growth and improvement. Its Medicare Advantage business is on pace to serve an additional 800,000 people this year, while Optum Health is expected to add 650,000 net new patients to value-based care arrangements.
