What Happened?

Shares of health insurance company UnitedHealth (NYSE: UNH) fell 18.8% in the morning session after the company reported its fourth-quarter results and issued a weak revenue forecast for 2026. 

For the upcoming year, the company guided for full-year revenue of approximately $439 billion at the midpoint. This figure not only represents a potential decline from its 2025 revenue but also came in 3.7% below Wall Street's consensus estimates. While the company's fourth-quarter revenue and earnings per share were in line with expectations, the disappointing forward-looking guidance signaled potential challenges ahead, leading to the sharp sell-off.

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What Is The Market Telling Us

UnitedHealth’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for UnitedHealth and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 10 months ago when the stock dropped 22.9% on the news that the company reported underwhelming first-quarter 2025 results as its sales and profits fell below Wall Street expectations. 

The real story was the sudden rise in health care activity among seniors in its Medicare plans, which pushed costs higher and hurt profits. Some of those activities were delayed visits dating back to the COVID period. As a result, while revenue grew 10% from the previous year, costs grew faster. This reflected in the medical care ratio, which ticked up, meaning more of each dollar went to covering claims, and the company expected the ratio to increase significantly in the near term. Guidance was the biggest concern. The new full-year earnings forecast came in well below what analysts had been expecting, mainly because the company saw its care (medical costs in its privately run Medicare plans) and funding issues lasting longer. 

Overall, this was a disappointing quarter. While top-line growth was decent, bottom-line pressures and reimbursement risk remain unresolved, clouding the earnings outlook.

UnitedHealth is down 15.2% since the beginning of the year, and at $285.22 per share, it is trading 52.4% below its 52-week high of $599.47 from April 2025. Investors who bought $1,000 worth of UnitedHealth’s shares 5 years ago would now be looking at an investment worth $856.55.

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