UnitedHealth UNH Q2 Revenue Preview

UnitedHealth Group Chair and CEO Stephen Hemsley faces the first real test of Tuesday’s first of all, Tuesday’s first, of his ability to regain investor trust as the biggest private insurance company reports revenue.

The Dow component has been stocked in almost half since mid-May, and has been in stock in the worst years for over a decade after flagship Medicare program revenues and Optum Health doctor practices plummeted. That led to the sudden resignation of former CEO Andrew Whitty, and the company forced former CEO Hemsley to revive him and replace him, forcing him to suspend revenue guidance. In addition, the company faces a Criminal and Civil Justice Department investigation into Medicare claims practices.

As United Health faces challenges on multiple fronts, it sits in a “perfect storm,” said Anne Hines, Mizuho Securities Analyst. Now, investors want to know how Hemsley plans to run the company out of the whirlwind after assuring them last June that “we are humbled to regain your trust and confidence.”

Below are three important things investors are looking for from the company’s revenue report:

Analysts focus on United Health’s one-year outlook rather than second-quarter figures. Hemsley told investors that after halting forecasts in May, the company will provide updates on its 2025 revenue guidance.

According to LSEG consensus estimates, analysts expect UnitedHealth to post adjusted annual revenue of $21.26 per share. Estimates range from a peak of $18 per share to $26.44 per share.

“What’s under $18 – that would be considered negative by the street,” Hines said.

RBC Capital Markets analyst Ben Hendrix said he outpaced his estimate by $13.36, but Wall Street is weakened by UnitedHealth.

“While we are expressing our more optimistic outlook based on management’s claim that Medicare’s advantage is profitable at a 3% low-end vision of the target MA margin in 2026, the client we’ve spoken to have expressed concern about the ongoing margin compression of optom health and the ongoing margin (health costs) trends in core Medicare advantage,” he wrote early in the month.

Analysts also focus on plans for the company to stabilize Optum Health, the physician practice unit. Over the years, UnitedHealth has helped it outweigh its colleagues in the flagship Medicare Advantage program by leveraging 90,000 jobs or associated physicians to treat patients with UnitedHealth’s own plans.

“The investors in the period were investing in United for the power of United… Optum Health, United’s power piloted their own Medicare Advantage members and extracted a significant margin that they had previously failed.”

However, in the first quarter of this year, Optum Health’s profits fell sharply. Analysts say the plunge is partly attributable to changes in the Biden era of Medicare reimbursement standards known as the V28, making it difficult for insurers and physicians to claim additional services.

Mizuho’s Hynes said the previous billing coding rules allow much more room for planning to add billing codes related to chronic conditions that provide a higher risk score and reimbursement rate, such as overall cardiac conditions. Under the new V28 rules, the billing code is more specific and closes loopholes that could boost your refund.

“The V28 is so black and white, so it doesn’t have the ability to add code and a lot of code has been removed,” she said, adding that “it has led to a structural change in the margins of optom health.”

However, the HA said the V28 changes began in 2024, when older people began to access more care. Many of UnitedHealth’s many Medicare Advantage competitors adjusted last year to address the shift. The sudden collapse of Optum Health margins in the first quarter appears to have caught UnitedHealth off guard.

“I think that’s an example of my sex. They knew the headwinds towards that year and even before that, but for some reason they couldn’t find the offset,” HA said. “We are still confident that Optum Health and United can restore and rebuild the economics of our units, but we believe it could potentially worsen over the next year or two.”

The company competed ahead of Thursday’s revenue report, submitting to the SEC that claims practices for the Medicare program face criminal and civil investigations by the Department of Justice.

UnitedHealth said the company is helping out the investigation, first reported by the Wall Street Journal. He also noted in March that a court-appointed special master awarded the company’s favor in a case involving a similar allegation brought by the DOJ during the first Trump administration.

Hines believes investors’ concerns about the DOJ probe are exaggerated.

“Stocks are traded to make the government get kicked out of Medicare and Medicaid, and in my opinion there is no chance of that,” she said. “Perhaps they’ll end up writing a check and entering into a corporate integrity agreement… That’s what happened in the past.”

However, he allegedly claimed that the shooting death of United Health executive Brian Thompson in December was by a gunman motivated by a refusal to insurance.

Former whistleblower Wendell Potter, who criticized industry practices after his career at Cigna, said pressure on large insurers like UnitedHealth is likely to remain unstoppable. As Washington tackles the high health and drug costs for Medicare, Medicaid and other government health programs, there is an increasing scrutiny of regulations in Congress on both sides of the aisle.

“Many of the Congress members, doctors and Republicans, are pharmacists and look at the heavy hands of these companies firsthand,” said Potter, chairman of the Centers for Health and Democracy. “And you see interest from Republicans, but I’ve never seen it.”

In June, UnitedHealth announced that it had hired a third-party auditor to conduct a review of the company’s practices in health insurance and pharmacy benefits services in order to “provide stakeholder transparency and reliability” to our business practices.

The company told CNBC there is not much details to offer about its audit during its second-quarter revenue call. We don’t expect the review to be completed until the end of the third quarter of this year.