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UnitedHealthcare Pressure Builds: Trouble Ahead for UNH's Q2 Earnings?
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Key Takeaways
UNH's Q2 earnings are expected to fall 28.8% year over year despite 12.8% projected revenue growth.
Elevated medical costs and operating expenses continue to pressure margins across UnitedHealthcare.
Confirmed DOJ probe has intensified concerns over UnitedHealth's regulatory risks.
UnitedHealth Group Incorporated (UNH - Free Report) is set to release its second-quarter 2025 results on July 29, 2025, before market open. As a bellwether in the healthcare sector, UNH’s performance offers critical insight into the broader health insurance landscape, an industry currently grappling with surging medical costs and mounting regulatory scrutiny. Plunging profits from its UnitedHealthcare unit are expected to have affected UNH’s second-quarter results.
Recent challenges, including the withdrawal of the 2025 earnings outlook, a surprise CEO transition, and damaging headlines about federal investigations, have significantly eroded investor confidence. On Thursday, the company confirmed that the Department of Justice is probing aspects of its Medicare business. UNH stated it had “proactively reached out to the Department of Justice” after reviewing media reports and is now “complying with formal criminal and civil requests.”
Following UNH’s lead, peers like Centene and Humana Inc. (HUM - Free Report) withdrew their 2025 profit outlook, while Molina Healthcare, Inc. (MOH - Free Report) slashed its guidance. The stock performance across the managed care industry reflects these concerns: year to date, UNH shares have plunged 45%, matching Molina Healthcare’s decline, while Humana is down 9.7%. The broader industry has tumbled 34.3% over the same period, sharply underperforming the S&P 500’s 7.6% gain.
Despite the sharp sell-off, UnitedHealth still trades at 11.98X forward 12-month earnings, slightly above the industry average of 11.58X. However, this is well below the company’s five-year median P/E of 19.20X, reflecting the market’s growing concerns around operational stability and regulatory risk.
Image Source: Zacks Investment Research
In comparison, Humana and Molina Healthcare are currently trading at 15.76X and 6.48X, respectively.
Now let’s focus on the UnitedHealthcare, UNH’s biggest segment by revenue generation.
Spotlight on UnitedHealthcare Segment
Through this segment, UNH offers healthcare benefits worldwide. While it has significant exposure to the Medicare and Medicaid markets, it also serves individuals and employers. The defensive properties of the sector enabled UnitedHealth to maintain its momentum, which is now impacted by rising medical costs in Medicare Advantage and a surge in high-acuity patient volumes.
In the last reported quarter, the segment’s revenues jumped 12.3% year over year to $84.6 billion, whereas the operating income improved 18.9% to $5.2 billion. Considering the unit’s products, premiums increased 12.8% year over year to $81.5 billion in the first quarter, while service revenues grew 1.9% to $2.6 billion. Total revenues from the Employer & Individual Domestic, Medicare & Retirement and Community & State businesses increased 6.9%, 17.5% and 12.5% year over year, respectively. But, from global operations, UNH reported revenues of $782 million, down 49% year over year.
Q2 Segment Expectations: Revenues to Rise, Profits to Fall
The Zacks Consensus Estimate for UnitedHealthcare’s revenues indicates a 14.7% year-over-year increase from the year-ago level of $73.9 billion, whereas our model estimate suggests a 14.1% rise. The consensus mark for second-quarter operating income signals a more than 30% year-over-year decline from $4 billion a year ago.
With growing elective procedures, medical costs are expected to have remained elevated in the second quarter. This is expected to have resulted in UNH having a lower portion of premiums remaining after settling payments. As such, the consensus mark for the second-quarter 2025 medical care ratio is pegged at 88.6%, indicating an increase from the year-ago level of 85.1%, while our estimate of 87% suggests a lower jump.
The consensus estimate for Employer & Individual Domestic revenues indicates more than 6% year-over-year growth to nearly $19.8 billion. The consensus mark for UnitedHealthcare’s Community & State revenues suggests an 18.8% increase from the year-ago period’s $19.7 billion, whereas our model predicts a 19% gain. The consensus estimate for Medicare & Retirement business’ revenues suggests 18.2% year-over-year growth from $34.9 billion a year ago, while our estimate indicates a 16.3% improvement.
The Zacks Consensus Estimate for UnitedHealthcare’s total number of people served in the commercial domestic business indicates a 1.5% increase from the year-ago level of 29,570 thousand, while our estimate implies a 1.2% rise. The consensus mark for total UnitedHealthcare medical membership calls for 0.7% year-over-year growth in the second quarter.
Final Thoughts
Despite a projected 12.8% year-over-year increase in total revenues to $111.55 billion, the UnitedHealthcare unit is anticipated to have positioned the company for a significant year-over-year decline in profits. The Zacks Consensus Estimate for second-quarter earnings is pegged at $4.84 per share, representing a steep 28.8% drop from $6.80 a year ago.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
Elevated costs and expenses are expected to have influenced UNH’s second-quarter profit margins, creating uncertainty about an earnings beat. Our estimate for total medical costs indicates a nearly 15% year-over-year increase, while we expect operating expenses to have increased by almost 14%. Further, we expect the cost of products sold to have jumped more than 10% year over year in the second quarter.
Also, our proven model does not conclusively predict an earnings beat for UnitedHealth. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. UnitedHealth has an Earnings ESP of -9.55% and currently carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ongoing operational and regulatory headwinds have eroded UnitedHealth’s investment appeal. With limited upside and heightened downside risk ahead of second-quarter 2025 results, the Sell rating reflects a cautious stance and urges investors to consider exiting their positions.
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UnitedHealthcare Pressure Builds: Trouble Ahead for UNH's Q2 Earnings?
Key Takeaways
UnitedHealth Group Incorporated (UNH - Free Report) is set to release its second-quarter 2025 results on July 29, 2025, before market open. As a bellwether in the healthcare sector, UNH’s performance offers critical insight into the broader health insurance landscape, an industry currently grappling with surging medical costs and mounting regulatory scrutiny. Plunging profits from its UnitedHealthcare unit are expected to have affected UNH’s second-quarter results.
Recent challenges, including the withdrawal of the 2025 earnings outlook, a surprise CEO transition, and damaging headlines about federal investigations, have significantly eroded investor confidence. On Thursday, the company confirmed that the Department of Justice is probing aspects of its Medicare business. UNH stated it had “proactively reached out to the Department of Justice” after reviewing media reports and is now “complying with formal criminal and civil requests.”
Following UNH’s lead, peers like Centene and Humana Inc. (HUM - Free Report) withdrew their 2025 profit outlook, while Molina Healthcare, Inc. (MOH - Free Report) slashed its guidance. The stock performance across the managed care industry reflects these concerns: year to date, UNH shares have plunged 45%, matching Molina Healthcare’s decline, while Humana is down 9.7%. The broader industry has tumbled 34.3% over the same period, sharply underperforming the S&P 500’s 7.6% gain.
YTD Price Performance – UNH, HUM, MOH, Industry & S&P 500
Despite the sharp sell-off, UnitedHealth still trades at 11.98X forward 12-month earnings, slightly above the industry average of 11.58X. However, this is well below the company’s five-year median P/E of 19.20X, reflecting the market’s growing concerns around operational stability and regulatory risk.
In comparison, Humana and Molina Healthcare are currently trading at 15.76X and 6.48X, respectively.
Now let’s focus on the UnitedHealthcare, UNH’s biggest segment by revenue generation.
Spotlight on UnitedHealthcare Segment
Through this segment, UNH offers healthcare benefits worldwide. While it has significant exposure to the Medicare and Medicaid markets, it also serves individuals and employers. The defensive properties of the sector enabled UnitedHealth to maintain its momentum, which is now impacted by rising medical costs in Medicare Advantage and a surge in high-acuity patient volumes.
In the last reported quarter, the segment’s revenues jumped 12.3% year over year to $84.6 billion, whereas the operating income improved 18.9% to $5.2 billion. Considering the unit’s products, premiums increased 12.8% year over year to $81.5 billion in the first quarter, while service revenues grew 1.9% to $2.6 billion. Total revenues from the Employer & Individual Domestic, Medicare & Retirement and Community & State businesses increased 6.9%, 17.5% and 12.5% year over year, respectively. But, from global operations, UNH reported revenues of $782 million, down 49% year over year.
Q2 Segment Expectations: Revenues to Rise, Profits to Fall
The Zacks Consensus Estimate for UnitedHealthcare’s revenues indicates a 14.7% year-over-year increase from the year-ago level of $73.9 billion, whereas our model estimate suggests a 14.1% rise. The consensus mark for second-quarter operating income signals a more than 30% year-over-year decline from $4 billion a year ago.
With growing elective procedures, medical costs are expected to have remained elevated in the second quarter. This is expected to have resulted in UNH having a lower portion of premiums remaining after settling payments. As such, the consensus mark for the second-quarter 2025 medical care ratio is pegged at 88.6%, indicating an increase from the year-ago level of 85.1%, while our estimate of 87% suggests a lower jump.
The consensus estimate for Employer & Individual Domestic revenues indicates more than 6% year-over-year growth to nearly $19.8 billion. The consensus mark for UnitedHealthcare’s Community & State revenues suggests an 18.8% increase from the year-ago period’s $19.7 billion, whereas our model predicts a 19% gain. The consensus estimate for Medicare & Retirement business’ revenues suggests 18.2% year-over-year growth from $34.9 billion a year ago, while our estimate indicates a 16.3% improvement.
The Zacks Consensus Estimate for UnitedHealthcare’s total number of people served in the commercial domestic business indicates a 1.5% increase from the year-ago level of 29,570 thousand, while our estimate implies a 1.2% rise. The consensus mark for total UnitedHealthcare medical membership calls for 0.7% year-over-year growth in the second quarter.
Final Thoughts
Despite a projected 12.8% year-over-year increase in total revenues to $111.55 billion, the UnitedHealthcare unit is anticipated to have positioned the company for a significant year-over-year decline in profits. The Zacks Consensus Estimate for second-quarter earnings is pegged at $4.84 per share, representing a steep 28.8% drop from $6.80 a year ago.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
Elevated costs and expenses are expected to have influenced UNH’s second-quarter profit margins, creating uncertainty about an earnings beat. Our estimate for total medical costs indicates a nearly 15% year-over-year increase, while we expect operating expenses to have increased by almost 14%. Further, we expect the cost of products sold to have jumped more than 10% year over year in the second quarter.
Also, our proven model does not conclusively predict an earnings beat for UnitedHealth. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. UnitedHealth has an Earnings ESP of -9.55% and currently carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Ongoing operational and regulatory headwinds have eroded UnitedHealth’s investment appeal. With limited upside and heightened downside risk ahead of second-quarter 2025 results, the Sell rating reflects a cautious stance and urges investors to consider exiting their positions.