UnitedHealth Group (UNH) held its first earnings call since the shooting of its insurance executive last month. UnitedHealthcare CEO Brian Thompson was killed outside of an investor day meeting in New York City on Dec. 4. Luigi Mangione, 26, of Towson, Md., was arrested for the murder days after the attack.
United missed on revenue, sending the stock down nearly 3% Thursday. The company reported $100.8 billion, missing Wall Street consensus of $101.6 billion.
The company also reported $400 billion in full-year revenues for 2024, up 8% year over year. And despite the hit to profits last year from the Change Healthcare cyberattack, the company logged $14 billion in profits for the year.
The company also reported higher medical costs than Wall Street expected, with a medical loss ratio of 87.6% compared to a consensus estimate of 86.1%.
At close: January 17 at 4:00:02 PM EST
The medical loss ratio is calculated by comparing claims paid to the amount of premiums collected. The Affordable Care Act (ACA) required that companies spend between 80% and 85% of premiums on medical care, and insurers like to stay on the lower end of that range.
Morgan Stanley analysts said the focus should shift to the 2025 outlook.
“While we had expected a slight MLR [medical loss ratio] miss in 4Q, this was a larger miss than expected, +110 bps higher than plan, off of the latest consensus metrics that had already crept higher throughout the week. That said, we think investor focus should increasingly turn to 2025, where we’d argue it has set reasonably prudent targets,” analysts wrote in a note to clients Thursday.
CEO Andrew Witty addressed the public outrage targeting the company and industry in the aftermath of the shooting, in particular the frustration over rejected claims.
“When you look across claims, less than 1% are rejected for medical reasons,” Witty said.
“We are experiencing and engaged with a much-heightened energy across the organization to solve this across the whole sector for everybody,” he added.
Witty believes 85% or more of claims that are rejected for process-related reasons could be reduced with better real-time tools, including the use of artificial intelligence.
UnitedHealth is currently facing a class-action lawsuit over the use of its AI algorithm by its NaviHealth subsidiary. The company denied allegations that it used its AI tool to automatically determine claims.
“There is no reason in the world why engaging with the healthcare system should feel any different or any less easy than any other engagement you have in your life,” Witty said.