By Sriparna Roy and Sneha S K
Jan 27 (Reuters) – UnitedHealth fell more than 16% on Tuesday after the healthcare giant said its 2026 revenue would contract, while investors reset their profit expectations for the industry following a lower‑than‑expected Medicare reimbursement proposal for 2027 from the government.
The U.S. Medicare agency said on Monday that the payment rates for the government-backed Medicare Advantage health plans will rise by just 0.09% in 2027, well short of Wall Street expectations of an increase of up to 6%.
The near flat payment rate sent shares tumbling across the sector. CVS fell 13% and and Humana 16.5% in premarket trading.
Analysts said the prospect of lower government revenue from the Medicare plans, meant for people aged 65 and older or with disabilities, deepened worries about UnitedHealth’s recovery.
UnitedHealth missed earnings estimates last year for the first time since 2008 as it dealt with a cyberattack that caused customer losses, unexpected increases in medical fees and use, and fallout from the killing of a top executive that set off an outpouring from Americans resentful of healthcare costs.
The company last year fired its CEO Andrew Witty and brought back Steve Hemsley for another stint as CEO, who has promised a turnaround.
James Harlow, senior vice president at Novare Capital Management, which owns UnitedHealth shares, said the proposal “starts to bring in worries about 2027 earnings growth” and raises doubts about whether companies can meet Wall Street’s expectations.
UnitedHealth expects 2026 revenue to exceed $439 billion, a 2% year-over-year decline reflecting previously announced cuts across the enterprise, as well as lower than analysts’ average estimate of $454.6 billion, according to data compiled by LSEG.
“The guidance appears to have pushed shares down a bit further,” said Julie Utterback, analyst at Morningstar. “Investors hoping for a quick turnaround may have to wait longer than hoped.”
EARNINGS GROWTH IN 2026
UnitedHealth has targeted a return to growth in 2026 and sees annual profit per share of greater than $17.75, slightly above analysts’ average estimate of $17.74. It reported 2025 adjusted earnings of $16.35 per share.
The company sees 2026 medical care ratio – the percentage of premiums spent on medical care – at about 88.8%. Analysts were expecting about 88.64%.
UnitedHealth reported a 2025 adjusted medical care ratio at 88.9%, compared with 85.5% in 2024 and analysts’ expectation of 89.1%.
On an adjusted basis, the company earned a fourth-quarter profit of $2.11 per share, marginally above the market consensus of $2.10.
The company took a one-time charge of $1.6 billion after taxes that was excluded from adjusted results, which reflects costs related to the Change Healthcare cyberattack and other restructuring costs.
(Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Shinjini Ganguli)
