Higher medical costs that have hurt UnitedHealth Group’s Medicare Advantage business are beginning to crop up in other lines of business, CFO John Rex told investors in a May 13 conference call.
That day the company also pulled its earnings guidance for 2025 and announced that CEO Andrew Witty would step down for personal reasons. Stephen Hemsley, who led the company for more than a decade has returned to the CEO role.
Mr. Rex told investors on the call that three factors are driving spending higher than expected — higher-than-anticipated costs for new enrollees, increased utilization in Medicare Advantage and indications the trend may broaden to other areas.
In the first quarter of 2025, UnitedHealth Group missed earnings expectations. The company was caught off guard by care utilization rates twice as high as expected among its Medicare Advantage membership.
Mr. Witty called the company’s performance “unusual and unacceptable.”
The majority of increased spending utilization is still in Medicare Advantage, Mr. Rex said, but the trend could show up in other populations.
“What we’ve seen over the last week is movement into adjacent [to MA] populations — people with complex conditions,” he said. “It is still largely on the outpatient and physician side where we are seeing most of the increased utilization.”
Mr. Rex said UnitedHealth Group is incorporating the trend into its 2026 Medicare Advantage bids and pricing for other markets.
