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UnitedHealth Q2 Earnings Miss Estimates on Increasing Medical Costs
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Key Takeaways
UNH Q2 EPS of $4.08 missed estimates and dropped 40% year over year due to rising medical costs.
Revenue grew 12.9% to $111.6B, led by domestic commercial membership and strength in Optum Rx.
Medical costs jumped to $78.6B, lifting the MCR to 89.4% and driving operating earnings down 34.6%.
UnitedHealth Group Inc. (UNH - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $4.08, which missed the Zacks Consensus Estimate of $4.84. The bottom line declined 40% year over year.
Revenues rose 12.9% year over year to $111.6 billion. The top line marginally beat the consensus mark by 0.1%.
The weak quarterly earnings took a hit from elevated medical costs, partly offset by domestic commercial membership growth and strength witnessed in Optum Rx.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth’s second-quarter premium of $87.9 billion increased from $76.9 billion a year ago and also beat the consensus mark by 0.8%.
UNH’s medical care ratio (MCR) was 89.4% in the second quarter, which deteriorated 430 bps from the year-ago period. The metric was higher than the Zacks Consensus Estimate of 88.6% and our estimate of 87%. MCR witnessed an increase due to the previously noted reductions in Medicare funding and medical cost trend, which exceeded the pricing trend. Medical costs of $78.6 billion rose from $65.5 billion a year ago.
Second-quarter total operating costs of $106.5 billion escalated 17% year over year due to higher medical costs and the cost of products sold. The figure came higher than our model estimate of $103.8 billion. The second-quarter 2025 operating cost ratio improved to 12.3% from 13.3% in 2024 due to increased technological and other operating efficiencies and Part D programs.
UnitedHealth’s operating earnings declined 34.6% year over year to $5.2 billion in the second quarter. The net margin deteriorated 120 bps to 3.1% from the year-ago period.
Performance of UNH’s Business Platforms
Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 17% year over year to $86.1 billion in the second quarter due to an increase in domestic commercial membership growth. The metric beat the Zacks Consensus Estimate of $84.8 billion.
Earnings from operations amounted to $2.1 billion, down from $4 billion a year ago. The operating margin decreased 300 bps year over year to 2.4%.
Revenues in the Optum business line were $67.2 billion, which rose 6.8% year over year due to strong contributions from Optum Rx. However, the figure fell short of the consensus mark of $67.5 billion.
Optum’s earnings from operations declined to $3.1 billion from $3.9 billion a year ago. The operating margin of 4.6% decreased 160 bps year over year.
UnitedHealth’s Medical Membership
The UnitedHealthcare business catered to 50.1 million people as of June 30, 2025, which grew 2.1% year over year due to its self-funded commercial benefits. However, the figure missed the Zacks Consensus Estimate of 50.3 million and also missed our estimate of 50.2 million.
UNH’s Financial Position (As of June 30, 2025)
UnitedHealth exited the second quarter with cash and short-term investments of $32 billion, which rose from the 2024-end level of $29.1 billion.
Total assets of $308.6 billion increased from the $298.3 billion figure at 2024-end.
Long-term debt, less of current maturities, amounted to $73.5 billion, up from the $72.4 billion figure as of Dec. 31, 2024. Short-term borrowings and the current portion of long-term debt were $5.7 billion.
Total equity of $100.5 billion advanced from the 2024-end level of $98.3 billion.
UnitedHealth generated operating cash flows of $7.2 billion in the second quarter, which surged from the prior-year figure of $2.2 billion.
UNH Capital Deployment Update
UnitedHealth rewarded $4.5 billion to its shareholders in the form of share repurchases and dividends in the second quarter. In June, the company hiked the quarterly dividend rate by 5%.
UNH’s 2025 Outlook
Management now projects adjusted net EPS to be at least $16 for 2025, down from the previous guided range of $26-$26.50 compared with the 2024 figure of $27.66. Net earnings are now expected to be at least $14.65 billion, up from the 2024 level of $14.4 billion.
Revenues are now projected between $445.5 billion and $448 billion in 2025, up from $400.3 billion in 2024. Operating cash flows are now projected to be $16 billion, down from $24.2 billion in 2024.
The Zacks Consensus Estimate for West Pharmaceutical Services’ current-year earnings of $6.61 per share has witnessed four upward revisions in the past seven days against no movement in the opposite direction. West Pharmaceutical Services beat earnings estimates in each of the trailing four quarters, with the average surprise being 16.8%. The consensus estimate for current-year revenues is pegged at $3 billion, indicating 4.6% year-over-year growth.
The consensus estimate for Fresenius Medical Care’s current-year earnings of $2.22 per share has witnessed four upward revisions in the past 60 days against no movement in the opposite direction. Fresenius Medical Care beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $22 billion, indicating 5.2% year-over-year growth.
The Zacks Consensus Estimate for Doximity’s current-year earnings of $1.46 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Doximity beat earnings estimates in each of the trailing four quarters, with an average surprise being 29.9%. The consensus estimate for current-year revenues is pegged at $625.7 million, indicating 9.7% year-over-year growth.
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UnitedHealth Q2 Earnings Miss Estimates on Increasing Medical Costs
Key Takeaways
UnitedHealth Group Inc. (UNH - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $4.08, which missed the Zacks Consensus Estimate of $4.84. The bottom line declined 40% year over year.
Revenues rose 12.9% year over year to $111.6 billion. The top line marginally beat the consensus mark by 0.1%.
The weak quarterly earnings took a hit from elevated medical costs, partly offset by domestic commercial membership growth and strength witnessed in Optum Rx.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
Business Performance of UNH
UnitedHealth’s second-quarter premium of $87.9 billion increased from $76.9 billion a year ago and also beat the consensus mark by 0.8%.
UNH’s medical care ratio (MCR) was 89.4% in the second quarter, which deteriorated 430 bps from the year-ago period. The metric was higher than the Zacks Consensus Estimate of 88.6% and our estimate of 87%. MCR witnessed an increase due to the previously noted reductions in Medicare funding and medical cost trend, which exceeded the pricing trend. Medical costs of $78.6 billion rose from $65.5 billion a year ago.
Second-quarter total operating costs of $106.5 billion escalated 17% year over year due to higher medical costs and the cost of products sold. The figure came higher than our model estimate of $103.8 billion. The second-quarter 2025 operating cost ratio improved to 12.3% from 13.3% in 2024 due to increased technological and other operating efficiencies and Part D programs.
UnitedHealth’s operating earnings declined 34.6% year over year to $5.2 billion in the second quarter. The net margin deteriorated 120 bps to 3.1% from the year-ago period.
Performance of UNH’s Business Platforms
Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 17% year over year to $86.1 billion in the second quarter due to an increase in domestic commercial membership growth. The metric beat the Zacks Consensus Estimate of $84.8 billion.
Earnings from operations amounted to $2.1 billion, down from $4 billion a year ago. The operating margin decreased 300 bps year over year to 2.4%.
Revenues in the Optum business line were $67.2 billion, which rose 6.8% year over year due to strong contributions from Optum Rx. However, the figure fell short of the consensus mark of $67.5 billion.
Optum’s earnings from operations declined to $3.1 billion from $3.9 billion a year ago. The operating margin of 4.6% decreased 160 bps year over year.
UnitedHealth’s Medical Membership
The UnitedHealthcare business catered to 50.1 million people as of June 30, 2025, which grew 2.1% year over year due to its self-funded commercial benefits. However, the figure missed the Zacks Consensus Estimate of 50.3 million and also missed our estimate of 50.2 million.
UNH’s Financial Position (As of June 30, 2025)
UnitedHealth exited the second quarter with cash and short-term investments of $32 billion, which rose from the 2024-end level of $29.1 billion.
Total assets of $308.6 billion increased from the $298.3 billion figure at 2024-end.
Long-term debt, less of current maturities, amounted to $73.5 billion, up from the $72.4 billion figure as of Dec. 31, 2024. Short-term borrowings and the current portion of long-term debt were $5.7 billion.
Total equity of $100.5 billion advanced from the 2024-end level of $98.3 billion.
UnitedHealth generated operating cash flows of $7.2 billion in the second quarter, which surged from the prior-year figure of $2.2 billion.
UNH Capital Deployment Update
UnitedHealth rewarded $4.5 billion to its shareholders in the form of share repurchases and dividends in the second quarter. In June, the company hiked the quarterly dividend rate by 5%.
UNH’s 2025 Outlook
Management now projects adjusted net EPS to be at least $16 for 2025, down from the previous guided range of $26-$26.50 compared with the 2024 figure of $27.66. Net earnings are now expected to be at least $14.65 billion, up from the 2024 level of $14.4 billion.
Revenues are now projected between $445.5 billion and $448 billion in 2025, up from $400.3 billion in 2024. Operating cash flows are now projected to be $16 billion, down from $24.2 billion in 2024.
UNH’s Zacks Rank & Key Picks
UNH currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Medical space are West Pharmaceutical Services Inc. (WST - Free Report) , Fresenius Medical Care AG & Co. (FMS - Free Report) and Doximity, Inc. (DOCS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for West Pharmaceutical Services’ current-year earnings of $6.61 per share has witnessed four upward revisions in the past seven days against no movement in the opposite direction. West Pharmaceutical Services beat earnings estimates in each of the trailing four quarters, with the average surprise being 16.8%. The consensus estimate for current-year revenues is pegged at $3 billion, indicating 4.6% year-over-year growth.
The consensus estimate for Fresenius Medical Care’s current-year earnings of $2.22 per share has witnessed four upward revisions in the past 60 days against no movement in the opposite direction. Fresenius Medical Care beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $22 billion, indicating 5.2% year-over-year growth.
The Zacks Consensus Estimate for Doximity’s current-year earnings of $1.46 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Doximity beat earnings estimates in each of the trailing four quarters, with an average surprise being 29.9%. The consensus estimate for current-year revenues is pegged at $625.7 million, indicating 9.7% year-over-year growth.