UnitedHealth Just Triggered a Sector Meltdown (And It Has Nothing to Do With a Scandal This Time)

UnitedHealth just can’t catch a break. It’s been a little over four months since the shocking murder of Brian Thompson, the head of the company’s insurance division. That tragedy alone would’ve been enough to rock any Fortune 500 firm. But a week later, things somehow got worse. 

On top of that, Thompson was also accused of dumping $15 million in stock while allegedly knowing the Department of Justice was investigating the company’s Medicare billing practices. The timing raised eyebrows… and eventually, triggered a selloff that wiped more than 20% off UnitedHealth’s market cap in just a matter of days.

Well, fast forward to this morning, and investors are getting hit hard again. UnitedHealth stock crashed by 19% after the company but its 2025 profit forecast and reported weaker-than-expected first quarter results. Except this time it wasn’t a scandal, a legal issue, or a mysterious death. It was something far more routine, yet just as damaging to shareholders: rising costs.

According to UnitedHealth, their Medicare Advantage business is getting flooded with higher-than-expected outpatient visits and physician services. In other words: older adults are finally using the benefits they signed up for, and Wall Street is absolutely horrified. The company’s Q1 medical costs soared 11.7% to $65.75 billion, while premiums only rose 11%. The medical cost ratio ticked up to 84.8%... a seemingly small change that, in health insurance land, is about as welcome as an audit from the IRS.

To make things worse, even with revenue up 9.5% year over year to $109.6 billion, UnitedHealth still missed expectations. Earnings came in at $7.20 a share, shy of the $7.29 analysts were banking on. But the real punch to the nose came in the new forecast: adjusted EPS of $24.65 to $25.15 for the year. That’s a full $5 per share less than the earlier range of $29.50 to $30.

CEO Andrew Witty tried to reassure investors with the usual corporate self-help speech. He said the company grew to serve more people but hadn’t met its own standards. And now, they’re “aggressively addressing” the issues… aka hunting for every efficiency, layoff, or accounting trick in the book to stop the damage before the next quarter looks just as ugly.

Oh and the fallout didn’t stop at UnitedHealth’s front door. Humana, CVS, Cigna, Centene, and Elevance all took hits of 4–9% in sympathy, reminding everyone just how tightly wound the entire healthcare sector is around a single company’s margins. When UnitedHealth trips, the whole industry twists an ankle.

It’s a tough look for a company once treated like the Berkshire Hathaway of healthcare… predictable, dominant, and scandal-proof (just like Buffett). But now… they’re fighting off rising medical costs and a serious investor trust deficit (you know, just the two worst things a public company can face in the same fiscal quarter).

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Stock.News does not have positions in companies mentioned.