UnitedHealth Group Revises 2025 Outlook Due to Rising Medicare Costs

Despite a promising increase in revenue, UnitedHealth Group has revised its performance outlook for 2025 following higher-than-expected healthcare costs within its Medicare Advantage business. In Q1 2025, the company reported a significant $9.8 billion year-over-year revenue growth, bringing the total to $109.6 billion.

However, the increased medical care ratio, which rose slightly to 84.8% up from 84.3% in Q1 2024, is indicative of rising costs, largely attributed to Medicare funding reductions and a changing member mix.

The insurer noted particularly high costs in physician and outpatient services. Additionally, Optum Health saw revenue growth, primarily through its Optum Rx branch, with adjusted scripts climbing to 408 million from 395 million in the previous year. Concern over these unexpected expenses has led UnitedHealth Group to aggressively address these challenges to ensure long-term earnings growth, aiming for a target of 13 to 16%.