New York, Jan 27, 2026, 16:02 EST — After-hours
Shares of UnitedHealth Group Incorporated dropped 19.5%, closing at $282.90 in late New York trading on Tuesday, after fluctuating between $323.67 and $280.40.
The company reported full-year 2025 revenue at $447.6 billion and set its 2026 revenue outlook above $439.0 billion, with adjusted earnings guidance exceeding $17.75 per share. CEO Stephen Hemsley said the group “finished 2025 as a much stronger company,” highlighting efforts to turn the business around. (UnitedHealth Group)
Investors are eyeing Washington’s next steps on Medicare Advantage, the private insurance plans for seniors and disabled individuals. The Centers for Medicare & Medicaid Services announced its 2027 payment proposals, which would yield a modest average increase of 0.09% year-over-year. They also detailed changes to risk adjustment—the system that boosts payments for sicker patients—aimed at improving payment precision. CMS Administrator Dr. Mehmet Oz described these measures as efforts to make Medicare Advantage “work better.” (Centers for Medicare & Medicaid Services)
The rate headline slammed the broader managed-care sector Tuesday. CVS plunged roughly 11%, while Humana tumbled close to 19%. Other insurers faced pressure too, after the Trump administration’s proposal came in well below analysts’ expectations. Baird’s Michael Ha warned that the proposed rates versus medical-cost trends appear “insufficient,” possibly forcing benefit cuts or plan withdrawals to shore up margins. (Reuters)
Inside UnitedHealthcare, management is already preparing for significant churn. Tim Noel revealed on the earnings call that the insurance unit expects to shed between 1.3 million and 1.4 million Medicare Advantage members in 2026, attributing this to “competitive market dynamics” that have ramped up plan switching during enrollment. Medicaid membership is also forecasted to fall, with declines between 565,000 and 715,000, Noel added. (Fierce Healthcare)
Investors are zeroing in on one key figure: the medical loss ratio, which shows what portion of premium income is spent on medical expenses. When this ratio climbs, insurers face tough choices — they must either raise plan prices, cut back on benefits, or settle for slimmer profits.
With UNH stock, the key question is if pricing discipline will curb rising costs quickly enough to stabilize earnings amid declining membership. Optum’s results, along with potential fallout from plan “right-sizing,” feed into this debate.
The risk is clear. Should utilization remain high and the final Medicare Advantage rate update align with the current proposal, insurers might respond by slashing benefits, tightening networks, or exiting counties altogether. These steps could safeguard margins but would likely curb growth.
All eyes are on the government’s final Medicare Advantage rate announcement set for April 6. Traders are keen to see how insurers explain the gap between the proposal and rising cost trends, and if CMS revises its assumptions before finalizing the figures. (Reuters)
