When UnitedHealth Group (UNH) posted fourth-quarter results, shares lost around 20% on Tuesday. Markets reacted not to the results but to Washington’s proposal for very disappointing reimbursement rates. This hurt CVS Health (CVS), Humana (HUM), Molina (MOH), and Elevance Health (ELV) shares as well.
UNH expressed disappointment with the 2027 proposed reimbursement rates for Medicare Advantage payers. In addition, its revenue in the fourth quarter, along with its outlook for this year, did not meet expectations. UNH posted an adjusted earnings per share of $2.11. Revenue was $113.2 billion.
For 2026, UNH is forecasting an adjusted EPS of over $17.75 on revenue of over $439 billion. In the latter half of last year, UNH said an operational revamp cost the firm $1.6 billion ($1.78 a share).
Overreaction
UNH achieved 12% revenue growth rates, driven by Optum Rx. However, Optum Health has high operating costs. Looking ahead, investors expect that the health plan provider might need to decrease its rejection rate for claims. That would hurt its historical profit margins.
Buying the Dip
Investors who missed the last run-up might wait a few days for UNH stock to settle down. At current levels, the stock has better risk-to-reward dynamics. Still, the proposed reimbursement rates hurt the company’s profitability.
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