00:00 Speaker A
United Health shares sinking after missing Wall Street estimates on both the top and bottom lines. The company also slashing its guidance due to higher than expected costs in its Medicare advantage business. And Yahoo Finances, Angeli Camlani joins us now with more. You could say sinking odds. You could also say, uh, crashing, nose diving, mayhem. It is down nearly 25% here. What is going on? Walk us through it.
00:30 Angeli Camlani
Yeah, unfortunately, a confluence of factors, but the biggest one that I will focus on is the Medicare advantage hit that United Healthcare had to deal with. Medicare Advantage is that privately administered government insurance that is for Medicare for seniors. And, uh, United Healthcare is talking about how the misalignment essentially of utilization of these, uh, of the coverage, as well as the reimbursement from the government in the last year, has really come to a head for them. This caused a lot of pain for all Medicare Advantage players last year, but they’re starting to see the similar sort of increased utilization from seniors and then lower reimbursement costs. This is likely to right size in 2026 when the current administration has increased the amount of reimbursement, and that is because of analysis of use and so data informing that. So that’s where things stand right now. Just take a look at sort of across the board, United Healthcare and how it stacks up to its peers. It is one of the largest in this space, 29% of the eligible marketplace, and that’s kind of why we’re here talking about this. We heard from CEO, Andrew Witty, on the earnings call, saying quote, what we’re going through like the rest of the industry is a dramatic, really never seen before adjustment in pricing for this marketplace, and so that is what is causing the pain for the stock today.
02:14 Speaker A
So let me ask, if I’m an investor, I’m a viewer listening right now, maybe I’m not in UNH, but I’m in some peer. Am I worried that, okay, bad news is coming my way? Should I be extrapolating from this?
02:28 Angeli Camlani
Yes and no. The yes, because all Medicare Advantage players are feeling this pain, and they did feel it last year. I highlighted in an article I wrote today about how CVS CEO, former CBS CEO, Karen Lynch, on on her first quarter last year, talked about some of the same pressure points, increased utilization, but CVS and others have a lower market share. So CVS has about 12%, Humana 18%. So they’re not going to feel as much pain likely, but you are going to see some of the similar trends throughout the rest of the year.