UnitedHealth Group said it was making progress on the turnaround promised by second-time Chief Executive Stephen Hemsley, as the healthcare giant reported earnings that beat steeply lowered expectations.
The company on Tuesday slightly boosted its guidance for 2025 profit. Hemsley told analysts the current analyst earnings projections for 2026 represented a “likely stepping-out point,” and he was “confident we will return to solid earnings growth next year, given the operational rigor and more prudent pricing.” He said UnitedHealth aimed for double-digit growth in 2027.
Hemsley, who returned as CEO in May after an interval as chairman, has sought a reset at UnitedHealth after a financial meltdown that sliced hundreds of billions of dollars from the company’s valuation earlier this year. The shares have begun moving upward again recently, but are still well short of the peaks they achieved before an earnings shortfall announced in April punctured investors’ faith.
In early trading Tuesday, UnitedHealth shares rose slightly.
In July, UnitedHealth offered a rock-bottom projection for 2025 adjusted earnings per share of at least $16. Tuesday, the company raised that floor to $16.25.
UnitedHealth, like the rest of the managed-care industry, is facing a squeeze due to rising medical spending and regulatory changes. The biggest challenges have been in the company’s Medicare business, which is also under investigation by the Justice Department.
The company said it is retrenching across a number of its businesses, as it seeks to bolster margins. In Medicare, UnitedHealth said it expected to shrink by a million members. In its Affordable Care Act plans, the company said it was seeking average rate increases of more than 25%, and reducing its footprint when it couldn’t win the pricing it sought, changes likely to reduce enrollment by around two-thirds.
UnitedHealth said its Medicaid business will be break-even this year, but margins may decline next year. The company said some of its state customers’ rates weren’t keeping up with costs.
For the third quarter, UnitedHealth on Tuesday reported adjusted earnings per share of $2.92 compared with $7.15 a year earlier and a FactSet analysts’ consensus estimate of $2.80. Net income was $2.35 billion, down from $6.06 billion a year ago. Revenue rose about 12%, to $113.2 billion from $100.8 billion.
