Summary: UnitedHealth will release its second quarter earnings report before the market opens on July 29. From rising health insurance costs to management changes, UnitedHealth's development prospects are still full of uncertainty. Investors need to have enough patience to face the turbulent period.

First quarter review

UnitedHealth's revenue in the first quarter of 2025 was $109.575 billion, up 9.8% year-on-year, lower than analysts' expectations. Net profit in the first quarter was $6.474 billion, compared with a net loss of $1.221 billion in the same period last year.

By department, UnitedHealthcare achieved revenue of $84.62 billion, up 12% from the same period last year, exceeding the expected $83.87 billion. Optum's revenue increased 4.7% to $63.9 billion, but lower than the expected $67.17 billion.

Second quarter outlook

United Health lowered its annual profit forecast due to expected rising costs. The company expects earnings per share (EPS) to be between $26 and $26.5 this year, far lower than the previous forecast of $29.50 to $30 and lower than the market expectation of $29.74.

According to Bloomberg data, the market generally expects United Health's second quarter revenue to be $111.528 billion, adjusted net profit to be $4.168 billion, and adjusted EPS to be $4.626.

Highlights

Pressure from increasing medical insurance costs

UnitedHealth is highly concerned about the cost balance in medical insurance services. The continuous rise in medical expenses poses a challenge to overall profits. Judging from the situation in the first quarter, medical insurance costs continued to rise, causing the company to reassess the subsequent pressure. The R&D and technology ends also need continuous investment, and health data analysis and platform optimization require additional cost investment to support.

Rising demand for home medical care and elderly care

The aging population and the expansion of the scale of chronic disease patients have allowed the company to continue to increase investment in home medical care, health management, and remote services, and strive to improve customer stickiness. Management expects that the fluctuation of medical premiums will continue in the next quarter, and it is necessary to use economies of scale to dilute costs and cope with the impact.

Continuous investment in commercial insurance

Another major challenge facing UnitedHealth is to form a healthy customer structure between government medical insurance and commercial insurance. At present, government medical insurance has the characteristics of fast growth and relatively stable renewal rate, but a single user may bring higher medical expenses; while commercial insurance can provide higher profits. Management said that it will increase resource investment in commercial insurance, and its progress needs to be paid attention to.

Internal management optimization and personnel changes

Recently, the company's senior management team has experienced great turmoil, and the sudden departure of the CEO has caused investors to worry about the sustainability of the company's strategy. In the context of continued restructuring of the management and optimization of the talent structure this quarter, short-term execution will inevitably face tests. If the new management team works well and further promotes reforms, it may bring exciting changes. However, at this stage, the increase in internal management costs will also affect the growth momentum, which is a challenge that must be faced.