UnitedHealth Group’s first quarter profits exceeded $6 billion, but the nation’s largest health insurer stated that its 2025 earnings would be lower than expected due to the increasing costs of caring for seniors in its Medicare plans. In this image is a general view outside the United Healthcare corporate headquarters on December 4, 2024, in Minnetonka, Minnesota. (Photo by Stephen Maturen/Getty Images)
UnitedHealth Group’s first quarter profits surpassed $6 billion, but the nation’s largest health insurer indicated that its 2025 earnings would be lower than anticipated due to the rising costs of caring for seniors in its Medicare plans.
UnitedHealth, the parent company of UnitedHealthcare, reported on Thursday that it experienced “heightened care activity indications” in its Medicare Advantage business, which were significantly above what was originally planned.
Medicare Advantage plans, which provide benefits for more than half of the nation’s Medicare beneficiaries, have been impacted by rising costs in recent years, partly due to increased healthcare demand following the COVID-19 pandemic. UnitedHealth noted a spike in costs related to caring for seniors.
UnitedHealth Group stated, “Heightened care activity indications within UnitedHealthcare’s Medicare Advantage businesses, which became visible as the quarter closed, far above the planned 2025 increase which was consistent with the elevated levels in 2024.” The company shared this information in a statement released Thursday morning as part of its first quarter earnings report. The company highlighted significant activity in physician and outpatient services.
UnitedHealth mentioned that its medical care ratio (MCR) was 84.8%, up from 84.3% in 2024. The increase was attributed to various factors, including ongoing Medicare funding reductions, member mix, and higher senior care activity.
Consequently, UnitedHealth revised its 2025 performance outlook, lowering its net earnings to $24.65 to $25.15 per share and adjusted earnings to $26 to $26.50 per share. This adjustment was made from the previous forecast of net earnings of $28.15 to $28.65 per share.
Despite the revised outlook, the company reported a net income of $6.3 billion in the first quarter, a significant improvement from a $1.4 billion loss in the first quarter of 2024. Revenues also grew by nearly $10 billion to reach $109.6 billion.
The UnitedHealthcare unit demonstrated strong growth with first quarter revenues of $84.6 billion and operating earnings of $5.2 billion.
The first quarter earnings report coincides with ongoing changes at UnitedHealth following the tragic loss of the head of its UnitedHealthcare business, Brian Thompson, who was fatally shot on the street in New York City on December 4. Since then, the business has undergone management changes and appointed a new CEO earlier this year. Additionally, a man with a gun was arrested on UnitedHealthcare’s campus in Minnesota earlier this week.
Thompson’s untimely death prompted increased scrutiny on health insurer practices, with calls for reform from social media critics and lawmakers.
UnitedHealth Group, which also operates the healthcare services business Optum, noted that rising costs have impacted this segment as well. Optum owns various physician practices and outpatient healthcare facilities.
“Unanticipated changes in the profile of Optum Health members have affected planned 2025 reimbursement due to minimal 2024 beneficiary engagement by plans exiting markets,” the company explained. “Additionally, there has been a greater-than-expected impact on current and new complex patients from ongoing Medicare funding reductions initiated by the previous administration.”
