From Bad To Worse: UnitedHealth Posts First Annual Revenue Drop In Three Decades

Things have gone from bad to worse for UnitedHealth Group since late Monday.

First, the Trump administration’s plan to keep Medicare Advantage rates roughly flat next year (read the report) sent shares tumbling during the after-hours session on Monday evening.

The selloff intensified in premarket trading after the 2026 outlook and quarterly earnings disappointment. The stock plunged as much as 17% ahead of the cash opening in New York.  

UNITEDHEALTH SINKS MORE THAN 9% ON MEDICARE RATES REPORT

WHITE HOUSE PLANS FLAT RATES FOR MEDICARE INSURERS IN 2027: WSJ

Good sale Kevin Hern, who sits on the House Subcommittee on Health https://t.co/D2dSoBf8ul

— zerohedge (@zerohedge) January 26, 2026

UNH shares were already down about 8% heading into the earnings release. Shares extended losses after the insurer forecasted a decline in 2026 revenue, marking its first annual contraction in more than three decades.

Summary of the 2026 Outlook:

• Adjusted EPS: Guided above $17.75, modestly ahead of the $17.69 Bloomberg Consensus.

• Revenue: Forecast above $439B, well below the $455B Bloomberg Consensus, signaling top-line pressure.

• Operating cash flow: Expected above $18B, trailing the $19.7B estimate.

The takeaway from this year’s outlook: Profit guidance is slightly better than expected, but the revenue and cash flow outlooks underwhelm analysts’ estimates tracked by Bloomberg.

For the fourth quarter, UnitedHealth posted adjusted earnings of $2.11 per share, while revenue climbed 12% year over year to $113.22 billion. Wall Street analysts tracked by Bloomberg had been expecting $2.10 per share on revenue of $113.87 billion.

Summary of the 4Q24 Earnings:

Earnings: Adjusted EPS of $2.11 beat estimates by a cent but fell from $6.81 y/y. Reported EPS was $0.1 vs. $5.98 y/y.

Revenue: $113.22B, up 12% y/y, but missed Bloomberg Consensus of $113.87B.

Segment performance

• UnitedHealthcare: $87.11B, +18% y/y, above expectations.

• Optum total: $70.33B, +8% y/y, ahead of estimates.

• OptumRx: $41.46B, +16% y/y, beat estimates.

• OptumHealth: $25.54B, -0.5% y/y, roughly in line.

• OptumInsight: $5.04B, +5.5% y/y, modest beat.

Margins and costs:

• Medical care ratio: 92.4%, worse than the 92.1% estimate.

• Operating margin: 0.3%, sharply down from 7.7% y/y and well below the 2.9% estimate.

Enrollment: 49.76M members, below the 51.13M consensus.

The combination of the Trump administration’s plan to keep Medicare Advantage rates roughly flat and the first annual revenue drop in three decades disappoints investors, with shares down 17% in premarket trading. This is the largest intraday decline since the May 13, 2025, 17.8% decline.

“We confronted challenges directly and finished 2025 as a much stronger company, giving us the momentum to better serve those who count on us and continue to improve our core performance,” UNH CEO Stephen Hemsley wrote in a statement.