Wall Street is wary of UnitedHealth Group’s (UNH) near-term prospects after the company’s sudden CEO shake-up and its pulling of 2025 financial guidance on Tuesday.
Bank of America Securities, for one, downgraded the stock to Neutral.
“We view the decision to pull the 2025 guide as a combination of uncertainty around … the higher utilization as well as giving the incoming CEO additional time to become comfortable around the 2025 guidance he is now responsible for,” the analysts said to clients Wednesday.
UnitedHealth was hammered by increased costs in its first quarter earnings report, which seemed to be mostly attributed to Medicare Advantage plans and newer patients in its Optum health services business. The company had initially expressed confidence in working on reassessing its costs for more accurate expectations for the rest of the year.
But on Tuesday, CEO Andrew Witty, 60, was replaced by his predecessor, 72-year-old Stephen Hemsley, and 2025 guidance was pulled. Hemsley is credited with building UnitedHealth into the vertically integrated giant it is today, after running the company for more than a decade from 2006 to 2017. Witty took over in 2021.
The move sent UnitedHealth’s stock down 18% in trading on Tuesday. On Wednesday, the stock was little changed. This year, the company’s stock has plummeted more than 38%.
Read more about UnitedHealth’s stock moves and today’s market action.
“The company noted that care activity has accelerated and broadened to more types of offerings, while Medicare Advantage utilization remains higher-than-expected,” Mizuho Securities analyst Ann Hynes wrote in a client note Wednesday.
Hemsley and CFO John Rex noted on a call to investors Tuesday that the elevated costs are likely to spread to other parts of the insurance business and that they expect to revert to profitability in 2026.
UBS analysts reiterated that message in a note Tuesday.
“We have assumed that the elevated trends seen thus far in 2025 do not abate later this year,” they noted, signaling a painful year ahead for the insurance giant.
UnitedHealth has faced several headwinds in the recent past, ranging from a cyberattack, which had greater than initially realized impacts, to the tragic killing of its CEO, which caused the company to suffer harsh public backlash over the company’s and industry practices.
The reported higher costs from Medicare Advantage plans initially stoked fears about other peers in the group facing similar pain. CVS has faced similar problems in the past. But the issue now appears to be isolated to UnitedHealth and reflects poor pricing decisions from the previous year.
In any event, those “headwinds” have caused some to back off on the stock.
“For investors with duration, Tuesday’s selloff may present an attractive entry point. However, the six month view remains challenged … and the health insurance safety-trade may be over,” Barclays analysts wrote in a note to clients Wednesday. “Until an EPS floor is established … we see few investors willing to give UNH the benefit of the doubt.”
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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