UnitedHealth had a better-than-expected fourth quarter, but mounting medical costs and a series of unfortunate events leave a mixed taste. From pricey prescriptions to a tragic executive loss, the health giant’s ride is anything but smooth.
A Profitable Quarter, But Don’t Get Too Comfortable
UnitedHealth might be celebrating a higher-than-expected profit for Q4 2024, but Wall Street wasn’t popping champagne. While the company posted an adjusted $6.81 per share, medical costs were out of control. More than 87% of the premiums went right back to cover these rising costs. It’s great news for the medical industry, but not so much for stockholders. Analysts had hoped for a more balanced result, with expectations of $6.73 per share and $101.6 billion in revenue. Instead, revenue came in at $100.8 billion, missing the mark slightly.
Medical Costs Are the Real Pain in the Neck
UnitedHealth’s costly dilemma? Skyrocketing prescription drug costs, especially specialty medications. Add in the rate cuts to its Medicare business, and it’s no surprise that the company’s expenses are higher than expected. There’s also the matter of their Medicaid enrollment dropping by around 400,000 people. That’s a lot of missing premiums, and worse—rate updates from the states are lagging behind, leaving the company to foot the bill. Medical costs are no joke, and UnitedHealth’s quarterly results serve as a reminder that in healthcare, the numbers are often less about profits and more about prescription painkillers.
A Year of Setbacks and Surprises
For the first time in nearly a decade, UnitedHealth’s full-year profits took a nosedive in 2024—down a hefty 36% to $14.4 billion. The company had been riding high, but a massive cyberattack against its Change Healthcare division early in the year sent shockwaves through its operations. On top of that, the tragic shooting death of CEO Brian Thompson in December added a heavy emotional toll to an already challenging year. While the company made strides to recover, the combination of cybercrime and a heartbreaking tragedy left a dark cloud over its otherwise lucrative business model.
UnitedHealth: More Than Just Health Insurance
UnitedHealth isn’t just any health insurance company—it’s a sprawling empire. Covering over 49 million people through UnitedHealthcare, it also runs a massive pharmacy benefit management operation and offers tech support services. With such a vast scope, the pressure to balance costs, profits, and quality of care is intense. Add to that the public outcry following Thompson’s tragic death, and it’s clear: UnitedHealth is not just battling competitors but also a growing wave of frustration from everyday Americans who feel healthcare access is slipping further out of reach.
Stock Dips: A Rough Start to 2025
UnitedHealth’s stock opened the year with promise but took a steep tumble after the tragic December events. Shares dropped nearly 5%, reflecting a loss of investor confidence—something the health titan’s been struggling with since Thompson’s death. Other health insurance giants like CVS Health and Cigna followed suit, and the broader sector seems to be facing headwinds. If you’re looking for smooth sailing, don’t bet on it anytime soon; it’s a bumpy ride ahead for healthcare stocks.
