UnitedHealth Group reported Thursday that it earned less than expected in its latest quarter, citing higher medical costs and pressure on its insurance division at a time when the company is still reeling from the shocking murder of a top executive last month.
UnitedHealth Group’s revenue came in at $100.8 billion for the fourth quarter, below what analysts expected but still 6.8% higher than the same quarter a year earlier. The company’s full-year revenue for 2024 rose to $400.3 billion. For UnitedHealthcare, the insurance division, full-year revenue increased to $298.2 billion, up 6% from 2023.
The findings were the first for the company since UnitedHealthcare CEO Brian Thompson was shot and killed outside a Midtown Manhattan hotel.
The killing sparked public outrage at large health insurers for their lack of access to health care and denial of coverage and insurance claims.
Some shareholders have urged UnitedHealth to issue a report on its practices that “limit or delay access to health care.”
Andrew Witty, chief executive of UnitedHealth Group, said on a call with analysts Thursday that claims frustrations, including delays in receiving care and coverage, are “key areas to work hard to improve.”
A successor to Thompson has not yet been named. Mr. Witty did not share details about the job filling, nor did he directly address the recent shareholder campaign.
But he and other executives discussed Mr. Thompson’s loss early on in the call.
“He dedicated his time to making the health care system work better for all the people we are privileged to serve,” Witty said.
UnitedHealth’s results, which disappointed Wall Street, in many ways reflect broader trends and lingering problems for the industry. For several quarters, U.S. health insurers have suffered from their earnings due to high medical costs and tightening government payment policies.
John Rex, the company’s chief financial officer, pointed to government rate cuts in the payment system for the Medicare Advantage program, the private insurance arm of federal coverage for people 65 and older. UnitedHealth has a substantial business in these private Medicare plans.
Medicare Advantage benefits have declined across the industry recently, in part due to regulatory changes intended to prevent excessive pricing and as a result of rising health care spending among some older populations.
Witty also said there are costs associated with changes in Medicaid, the federal-state insurance program for the poor.
The company’s medical cost ratio, a measure of the cost of providing care, came in higher than expected in the latest quarter, which could fuel investor concerns that rising costs of providing care cures could persist, said John Boylan, an analyst. at Edward Jones, an investment firm.
UnitedHealth, however, kept its full-year guidance for 2025 intact, unaffected by recent pressures. Analysts at Morgan Stanley said in a research note that the company has set “reasonably conservative targets” for this year.
“Overall, our view is that United is well-positioned to navigate the changing healthcare landscape with its diversified business model,” Boylan said.
Shares of UnitedHealth fell 6% on Thursday as investors digested weaker-than-expected results. UnitedHealth’s results, often seen as industry-wide performance indicators, pushed down shares of its rivals, including CVS Health, which is the parent company of insurer Aetna.
UnitedHealth Group also owns Optum Rx, one of the country’s largest pharmacy benefits managers, which employers and government programs hire to oversee prescription drug benefits.
Optum Rx has faced scrutiny from regulators over concerns it would raise drug prices, prioritizing its own interests over those of patients, employers and taxpayers. Just this week, the Federal Trade Commission released a report detailing how PBMs may be inflating drug costs.
The agency criticized Optum Rx and two other major benefit managers — CVS Health’s Caremark and Cigna’s Express Scripts — for raising prices of generic drugs for cancer, heart disease and other illnesses by up to 1,000% of national average costs.
Witty, CEO of UnitedHealth Group, defended Optum’s practices, pointing out that 98% of the discounts were passed on to customers. By 2028, he said, all discounts will be passed on. Drug prices in the United States, Witty argued, are “de novo set too high compared to any other price in the world,” and the blame has been shifted to pharmaceutical companies.
“The PBM acts on behalf of the ultimate payer: the employer, the union, the state,” Witty told analysts.
Mr. Witty did not address the Justice Department investigation or lawsuits seeking to block his proposed acquisition of Amedsys, a large home care and hospice company.
In addition to rising medical costs and growing utilization of healthcare services, UnitedHealth executives pointed to the widespread ransomware attack in 2024 that weighed on the company’s full-year profits. The cyberattack forced the shutdown of the company’s vast billing and payment system, Change Healthcare. The company estimated that the health and privacy data breach affected more than 100 million people and said this week that a review of personal information involved in the incident was “substantially complete.”
Luigi Mangione, 26, has been charged with multiple state and federal counts of murder, as well as weapons and stalking offenses. He has pleaded not guilty.
UnitedHealth and police said neither he nor his parents had medical insurance through UnitedHealth.