By Sriparna Roy and Amina Niasse
(Reuters) – Analysts and investors are awaiting details behind UnitedHealth Group (NYSE:UNH)’s 2025 outlook when it reports quarterly results on Thursday, after its investor day presentations were canceled last month by the murder of executive Brian Thompson outside the New York hotel where the meeting was set to take place.
The company in a press release on Dec. 3 said it was expecting a profit of $29.50 to $30 per share, which was in line with Wall Street expectations.
The murder unleashed a social media storm of patient dissatisfaction and ire over the health insurance industry’s practices that raised questions about whether UnitedHealth would come under pressure to change how it operates.
“I think at one level people are just looking for them to express confidence in the outlook, and what are some of the puts and takes there of significance,” said UBS analyst AJ Rice.
“Hearing more about the two challenging areas – Medicare and Medicaid – will be important underpinnings for feeling confident about that outlook,” Rice added.
The health insurance industry has been grappling with high medical costs for over a year, particularly in government Medicare plans for older adults or those with disabilities as many people sought treatment delayed during the COVID-19 pandemic.
The issue extended in 2024 to Medicaid, which serves people with low income, with plans experiencing higher usage than budgeted, said Morningstar analyst Julie Utterback.
As states re-determined eligibility for their Medicaid plans, healthier members fell off the rolls, leaving behind those who require more medical services.
“We expect the Medicaid mismatch in rates and utilization to constrain profit growth through most of 2025,” Utterback said.
Regulatory risks for the industry also may increase, with lawmakers focused on pharmacy benefit managers and their role in high drug costs. UnitedHealth’s Optum is one of the nation’s largest PBMs.
UnitedHealth will likely face questions about its business practices and the potential for regulatory or consumer backlash, said James Harlow, senior vice president at Novare Capital Management, which owns more than 46,000 UnitedHealth shares.
“It’ll still be in the minds of folks that view these companies as villains, but all the companies can do is just continue to operate, beat numbers and continue to give cash back to shareholders,” Harlow said.
COST TRENDS
More broadly for insurers, the focus will remain on enrollment and cost trends, which will impact the 2025 outlook and the ability for each company to hit its margin targets, J.P. Morgan analyst Lisa Gill said in a note.
The expiration of enhanced tax credits that subsidize the cost of health plans for millions of Americans under the Affordable Care Act, popularly known as Obamacare, were extended through 2025 but could be at risk under President-elect Donald Trump, who takes office on Jan. 20.
Barclays (LON:BARC) analyst Andrew Mok sees a 50%-75% chance that the new administration will allow those credits to expire this year, leading to a 15% to 20% decrease in Obamacare insurance enrollment for 2026. Obamacare plans are sold through federal and state-based online exchanges.
“Medicare Advantage probably has a little more favorable backdrop when the Trump administration’s fully settled in. The question marks tend to be around the public exchanges and to a lesser degree around Medicaid,” said UBS’s Rice.
Analysts are estimating UnitedHealth will report a fourth-quarter profit of $6.72 per share and revenue of $101.76 billion on Thursday, according to LSEG data.
UnitedHealth shares have fallen 11% since Dec. 4, the day Thompson was killed, to about $543. They are up nearly 5% from a year ago.
