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United health group Chairman and CEO Stephen Hemsley faced the first actual test of investors’ confidence to re -acquire the real test, as the largest private American insurer earnings.
The dove component has cut the price of its stock in about half from mid -May, with stock for its worst year in more than a decade, after earning in its key Medicare Program and Optom Health Doctor Practices fallen. Due to which Sudden resignation Former CEO Andrew Viti, forcing the company to re-establish the former-CEO Hemsley and suspend the guidance of earnings. Above her, the company is Facing the investigation of the Department of Criminal and Civil Justice In its medicare billing practices.
As the United Health faces challenges on many fronts, it sits in the “right storm”, said Mizuho Securities Analyst N Hines. Now, investors want to know how Hemsley planned to get the company out of the tornado, after assuring them in the last June that “we are strongly determined to acquire our faith and your belief back.”
There are three major things here that investors will be looking at the company’s earnings report.
Large Number: 2025 Guidance
More than the second quarter number, analysts focus on the approach of the United Health for the whole year. Hemsley told investors that the company would provide an update on 2025 income guidance, after suspending its forecast in May.
Analysts hope that the United Health will post the United Health to adjust the full-year earnings of $ 21.26 per share, according to unanimous estimates from LSEG. The estimate ranges from a low of $ 18 per share to $ 26.44 per share.
“Anything below $ 18 – which will be seen as a negative by the road, said Hines said
RBC Capital Market analyst Ben Hendrix has unanimously estimated $ 23.36, but said Wall Street is a recession on United Health.
“While we base our more optimistic approach to management claims that the target for Medicare Advantage 2026 is beneficial with 3% less-end of MA margin, we have talked to customers that we have talked about constant margin compression in the Optamhenet and Excellent (Medical Cost) Trend in Core Medicare Advantage,” he wrote a note in this month.
Medicare Advantage and Optom Health Outlook
Analysts are also focused on how the company plans to stabilize its physician practice unit, Optom Health. Over the years, it helped his comrades better in their leading Medicare Advantage Program, taking advantage of their 90,000 employed or affiliated doctors to treat patients on their plans of United Health.
Baird analyst Michael Ha said, “Investors with periods were really investing for power in United … Optom Health, United of United of United Steering to his own Medicare Advantage members, taking out a lot of margins, which they could not do before, said” said the Baird Analyst Michael Ha.
But in the first quarter this year, Optom Health saw a sharp decline in profits. Analysts stated that the dip was due to a biden-era change in the medicare reimbursement standards, known as V28, making it difficult for insurers and doctors to bill for additional services.
Mizuho’s Hines stated that pre -billing coding rules left a lot of space for plans to connect billing codes related to older conditions, such as overall heart conditions, which would provide a high risk score and reimbursement rate. Under the new V28 rule, billing codes are more specific, closing flaws that can promote reimbursement.
“V28 is very black and white, so you do not have that kind of ability to add code, and a lot of codes are removed,” he said, now “is” a structural change in the margin for optum health. “
But Ha mentioned that the changes in V28 began in 2024, at a time when the seniors began to use more care. Several Medicare Advantage contestants of the United Health made adjustments in the last year to address the shift. The sudden collapse of the Optom Health Margin in the first quarter caught the United Health of Guard.
“I think this is an example of Misexecution. They knew that Headwind was well known in the year and even before that, but for a reason or no other was offered,” Ha said. “We are still convinced that Optom Health and United Unit can recover and reconstruct economics, but we think over the next one to two years, it can be potentially spoiled.”
Legal and regulatory issues
The company overtook the earnings report on Thursday, accepting one Second That its Medicare Program Billing practices have to face criminal and civil investigation by the Department of Justice.
The United Health said that the company was cooperating with the investigation, the first report was reported by the Wall Street Journal. It was also noted that in March, a special master appointed by a court ruled in favor of the company, which included similar allegations brought by DOJ during the first Trump administration.
Hines believe that the investor’s concern over the DOJ investigation has become more concerned.
He said, “Stock is trading like business, going to get them out of the Medicare and Medicade, and in my view it is zero,” he said. “It will probably end with them with a check writing and a corporate integrity agreement … that’s it happened in the past.”
But last December, the death of the shooting of United Health Executive Brian Thompson, alleging that the prosecutors alleged that a gunman, inspired by insurance refuses, formed a basis based on public criticism of health insurers’ practices.
Former whistleblower Vendel Potter, who criticized industry practices after a career in CIGNA, said that pressure on big insurers such as United Health will not stop pressure. The regulatory investigation in the Congress has increased on both sides of the corridor, as Washington struggles with high health and drug costs in Medicare, Medicade and other government health programs.
Potter, president of the Center for Health and Democracy, said, “A lot of Congress members who are doctors or Republicans are some pharmacists, and they already see the heavy hand of these companies.” “And so you are looking at interest by Republican, and I haven’t seen before.”
In June, the United Health announced that it hired third -party auditors to review the practices of the company in health insurance and pharmacy profit services “to provide transparency and confidence to our stakeholders in business practices of the company.
The company told CNBC that it would not have many details to offer about the audit during the second quarter earnings call. The review is not expected to be completed by the end of the third quarter of this year.
