“The momentum within this organization is palpable. We still have work to do in the coming months, but I am very pleased with the performance and prospects we have,” said Hemsley.Investors were less pleased as shares fell as much as 19% to $282.45, the biggest single-day drop since April last year. The company is expected to lose about $60 billion in market value if its shares don’t recover.
The U.S. Medicare agency said Monday that payment rates for government-sponsored Medicare Advantage health plans will rise just 0.09% in 2027, well behind Wall Street expectations of an increase of up to 6%.
The near-flat payment rate sent stocks plummeting across the sector. CVS Health fell 10%, while Humana fell 20% to $206.21, a low not seen since 2017.
Analysts said the prospect of lower government revenue from Medicare plans for people 65 and older or with disabilities exacerbated concerns about UnitedHealth’s recovery. Tim Noel, CEO of the company’s UnitedHealthcare insurance unit, called the rate proposal disappointing and said the company would continue to work with the government to push for a more favorable final rate increase.
“We will need very meaningful reductions in benefits and a hard look at our geographic and product footprint, probably similar to what happened in 2026,” Noel said.
UnitedHealth missed earnings estimates last year for the first time since 2008 as it faced a cyberattack that caused customer losses, unexpected increases in medical costs and utilization, and the fallout from the killing of a top executive that set off a flood of Americans angry about health care costs and denials of services.
The company fired CEO Andrew Witty last year and brought back former CEO Hemsley, who has promised a turnaround.
James Harlow, a senior vice president at Novare Capital Management, which owns shares of UnitedHealth, said the Medicare proposal is “beginning to raise concerns about earnings growth through 2027” and raising questions about whether companies can meet Wall Street expectations.
UnitedHealth expects revenue to exceed $439 billion by 2026, which would be a 2% decline, due to previously announced cuts across its operations. That’s also lower than the average analyst estimate of $454.6 billion, according to LSEG data.
“The guidance appears to have pushed stocks down a bit further,” said Morningstar analyst Julie Utterback. “Investors hoping for a quick turnaround may have to wait longer than hoped.”
PROFIT GROWTH IN 2026
Despite the expected revenue decline, UnitedHealth aims for a return to growth in 2026 and expects annual earnings per share of more than $17.75, slightly above the average analyst estimate of $17.74. It reported 2025 adjusted earnings of $16.35 per share.
The company expects the 2026 medical care ratio (the percentage of premiums spent on medical care) to be approximately 88.8%, higher than analyst expectations of 88.64%.
UnitedHealth reported an adjusted medical care ratio of 88.9% in 2025, up from 85.5% in 2024, and analysts’ expectations of 89.1%.
The company reported fourth-quarter adjusted earnings of $2.11 per share, a penny higher than Wall Street estimates.
It took a one-time after-tax charge of $1.6 billion, which was excluded from the adjusted results, reflecting costs related to the Change Healthcare cyber attack and other restructuring costs.
Patrick Conway, who heads United’s Optum Pharmacy Benefit Manager business, said it is leaning on automation to improve efficiency and plans to use artificial intelligence to approve care and process payments at the doctor’s office.
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