Why are UnitedHealth Group’s Shares Plunging in Premarket Trading?

UnitedHealth Group (NYSE:UNH) shares tumbled more than 5% in premarket trading Tuesday after the healthcare giant delivered disappointing second-quarter earnings and issued weak 2025 guidance that fell well short of Wall Street expectations.

The nation’s largest health insurer reported Q2 earnings per share of $4.08, missing analyst estimates of $4.45, while projecting full-year 2025 earnings of just $16.00 per share compared to the $20.90 consensus forecast. The results add to a growing string of setbacks for the company, which has been grappling with elevated medical costs in Medicare Advantage plans and broader industry challenges that have weighed heavily on investor sentiment.

UNH Earnings Disappoint: Key Facts and Market Impact

UnitedHealth Group’s second-quarter performance fell short across key metrics, with the company reporting adjusted earnings per share of $4.08 versus the $4.45 analyst consensus. While quarterly revenue of $111.62 billion slightly exceeded expectations of $111.59 billion, the earnings miss overshadowed this modest beat. The company’s medical care ratio—a critical measure of medical expenses relative to premiums collected—deteriorated significantly to 89.4% from 85.1% in the prior year period, primarily driven by higher medical costs in Medicare Advantage plans.

The disappointing results reflect broader challenges facing the health insurance industry, particularly elevated medical costs as seniors return to hospitals for procedures delayed during the COVID-19 pandemic. UnitedHealthcare, the insurance arm of UnitedHealth Group and the nation’s largest provider of Medicare Advantage plans, has been particularly impacted by these trends. The company’s struggles are viewed as a bellwether for the entire health insurance sector, making Tuesday’s results especially concerning for industry watchers.

Looking ahead, UnitedHealth provided 2025 guidance that fell dramatically short of Wall Street expectations, projecting earnings of at least $16.00 per share compared to analyst estimates of $20.91. The company also guided revenue between $445.5 billion and $448 billion, below the consensus estimate of $449.16 billion. Management indicated they expect the medical care ratio to remain elevated at 89% to 89.5% for 2025, suggesting ongoing pressure from higher medical costs.

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UNH Stock Brief: Premarket Decline and Key Metrics

As of 7:07 AM EDT Tuesday, UnitedHealth Group shares were trading at $271.08 in premarket trading, down $11.04 or 3.91% from Monday’s closing price of $282.12. The premarket decline followed the company’s earnings announcement and weak guidance, with shares initially falling more than 5% before recovering slightly.

The stock closed Monday’s regular session up $1.06 or 0.38%, but the earnings disappointment quickly erased those modest gains and then some.

UnitedHealth’s stock performance has been particularly poor over the past year, with shares down 49.55% over the trailing 12-month period compared to the S&P 500’s 17.05% gain. Year-to-date, the stock has declined 43.59% while the broader market has gained 8.64%. The company’s market capitalization stands at approximately $255.9 billion, though this figure will be reduced following Tuesday’s premarket decline.

The stock’s analyst price targets reflect the ongoing challenges, with an average target of $370.91—significantly above the current trading level but representing a more cautious outlook than in previous periods.

The company’s trailing price-to-earnings ratio of 11.81 suggests the stock may be undervalued relative to historical norms, but investors remain concerned about the sustainability of earnings given the elevated medical cost environment. With a forward dividend yield of 3.13% and a history of consistent dividend payments, income-focused investors may find some appeal, though the current operational challenges raise questions about future dividend growth prospects.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.