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A surprising cost spike from Medicare Advantage plans helped push UnitedHealth shares into a dive Thursday, after the health care giant said it was chopping its 2025 forecast following a worse-than-expected first quarter.

The company's stock shed more than $100 in value after markets opened Thursday, and the report rattled other insurance stocks.

UnitedHealth leaders said care use from people enrolled in its Medicare Advantage plans wound up increasing at twice the rate they had planned for the quarter.

That contributed to an overall performance that was “frankly unusual and unacceptable,” CEO Andrew Witty told analysts during a conference call. But he emphasized that this was a temporary issue that would get fixed this year.

The unexpected spike in use did not extend to the company's other lines of coverage, which include commercial insurance and state-and federally funded Medicaid plans.

UnitedHealth Group Inc. operates the nation’s largest health insurer, UnitedHealthcare, which covers more than 50 million people. It also has a large pharmacy benefit manager that runs prescription drug coverage and a growing Optum segment that delivers care and provides technical support.

With more than 8 million customers, UnitedHealthcare is the nation’s largest provider of Medicare Advantage plans. Those are privately run versions of the federal government coverage program mostly for people ages 65 and older.

Health insurers have struggled to maintain profit margins for their Medicare Advantage plans as funding cuts in former President Joe Biden’s administration combined with rising care use and costs, said Daniel Barasa, a portfolio manager at Gabelli Funds.

2026 rate increase for Medicare Advantage

UnitedHealth also was hurt in the first quarter by an influx of patients who turned out to be less healthy than expected for its care-providing Optum Health arm .

Overall, UnitedHealth posted a $6.3 billion profit in the quarter. That compares to a $1.41 billion loss in last year’s quarter, when the company absorbed heavy costs from 

Adjusted earnings of $7.20 per share on $109.58 billion in revenue in this year's first quarter.

Analysts expect earnings of $7.29 per share on $111.53 billion in sales, according to the data firm FactSet.

For 2025, UnitedHealth now predicts adjusted earnings ranging from $26 to $26.50 per share. The Eden Prairie, Minnesota, company had forecast last December earnings of $29.50 to $30 and then reaffirmed that outlook in January.

Analysts forecast earnings of $29.72 per share.

Company shares were down about 23 percent to $450.96 in midday trading. The Dow Jones Industrial Average, of which UnitedHealth is a component, was down about 1 percent.

UnitedHealth is the first insurer to report results every quarter, and many on Wall Street see it as a bellwether for the sector. Shares of several other insurers also plunged Thursday.

Humana Inc., the nation’s second-largest provider of Medicare Advantage plans, was down 8 percent.

UnitedHealth’s report will call into question the 2025 guidance of every insurer, TD Cowen analyst Ryan Langston said in a research note.

The Associated Press

Author

UnitedHealth chopped its 2025 forecast after being surprised by care use from its Medicare Advantage customers in a worse-than-expected first quarter. Shares of the health care giant started tumbling early Thursday.

After UnitedHealthcare's CEO was fatally shot, many people have expressed anger with the U.S. health care system.

UnitedHealth cuts 2025 forecast after dealing with first-quarter care use spike

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