UnitedHealth Group’s mixed Q4 earnings report comes amid scrutiny of PBM practices

The news: UnitedHealth Group’s shares fell nearly 5% as of the time of writing after the healthcare giant reported mixed earnings results for Q4 2024. Profits were $5.5 billion for the quarter and $14.4 billion for the year.

Key earnings stats: The company’s quarterly revenues grew about 7% year-over-year to $100.81 billion—missing the Zacks consensus estimate of $102.25 billion. A large driver was its insurance arm, United Healthcare, which pulled in $74.13 billion for the quarter compared with the $75.52 billion average estimate.

The insurer’s medical benefit ratio (how much a health plan spends on patient care) rose to 85.5% for the full year, up from 83.2% in 2023. Said simply, it’s paying more claims now.

Zooming out: While UnitedHealth is hardly struggling financially, it is still facing challenges related to public perception and Congressional scrutiny of its operations.

Lawmakers and investors are concerned about the conglomerate’s opaque business practices. The FTC just released its second report on pharmacy benefit managers (PBMs), which found that the Big 3 PBMs—including UnitedHealth’s Optum Rx—inflated the costs of specialty generic drugs by over 2,000% in some cases. The agency is also suing the Big 3 for driving up insulin prices.

That report comes on the heels of a request by UnitedHealth shareholders to analyze the impact of prior authorization requirements and coverage denials on both patients and the company itself, potentially in response to the public’s harsh reactions to the death of UnitedHealthcare CEO Brian Thompson on social media.

And the company is facing a public relations nightmare over its failure to protect patients’ sensitive health data. Consumers were less than pleased after learning that over 100 million of them had their health information stolen in a February 2024 cyberattack perpetrated on UnitedHealth unit Change Healthcare. That cyberattack had a nearly $3.1 billion revenue impact for the year.

The bigger picture: UnitedHealth will have to contend with the specter of potential changes to how it does business, namely more transparency around its PBM’s practices. So far, UnitedHealth doesn’t seem too concerned—the company reaffirmed its 2025 outlook indicating $450 billion to $455 billion in revenues, which would far exceed the $400.3 billion it raked in for 2024.

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