New York, Jan 27, 2026, 10:44 ET — Trading in the regular session.
- UnitedHealth shares dropped roughly 18% in morning trading, dragging down other managed-care stocks.
- A U.S. proposal suggests Medicare Advantage payments will see little change in 2027.
- UnitedHealth maintained its 2026 adjusted profit forecast just above Wall Street expectations, yet warned of declining revenue.
Shares of UnitedHealth Group Incorporated dropped 18.4% to $286.96 in Tuesday morning trading, as investors digested a rate shock in Medicare Advantage and its potential impact on 2027 earnings power.
Washington has released its initial take on Medicare Advantage—the private plans serving millions of seniors—with the Centers for Medicare & Medicaid Services forecasting a net average payment boost of just 0.09% for 2027, if this proposal holds. Comments are being accepted through Feb. 25, and CMS aims to finalize rates by April 6. (Centers for Medicare & Medicaid Services)
UnitedHealth, a key player in the sector, forecasted 2026 revenue above $439.0 billion and adjusted EPS surpassing $17.75. The firm reported adjusted earnings of $16.35 per share for 2025, citing “planned right-sizing” as it sets the foundation for 2026. (SEC)
Chief executive Stephen Hemsley said “momentum inside this organization is palpable,” despite the company warning of what Reuters called its first revenue drop since 1989. UnitedHealthcare unit CEO Tim Noel labeled the rate proposal “disappointing” and warned, “We will need very meaningful benefit reductions” alongside a tough reassessment of the company’s footprint. (Reuters)
Shares tumbled across the sector. CVS Health slid about 11%, while Humana plunged nearly 22%, Reuters reported. Analysts warned the rate update could force insurers to cut benefits or pull back from certain plans if it remains unchanged. “Simply put, the potential rates compared to the cost trend will likely be insufficient,” said Baird analyst Michael Ha. (Reuters)
UnitedHealth’s cost pressures remain a key concern. Its medical care ratio—the portion of premium revenue spent on medical claims—rose to 88.9% in 2025. Management forecasts it’ll hold near 88.8% in 2026 as repricing efforts kick in. The company also revealed $1.6 billion in charges related to cyberattacks and restructuring, partly linked to Change Healthcare. (MarketWatch)
There’s room for the numbers to shift. CMS described the 2027 Advance Notice as focused on “payment accuracy and sustainability.” Administrator Dr. Mehmet Oz pitched the updates as a way to shield taxpayers from spending that’s “not oriented towards addressing real health needs.” Still, the market remains concerned that tighter risk adjustment and other policy changes might hit before prices adjust. (Centers for Medicare & Medicaid Services)
CMS’s fact sheet hints at a more significant headline shift once the risk-score trend is factored in, with some analysts betting the final update will beat the proposal — though that hasn’t materialized into a tradeable fact yet. For now, investors are pricing in a “near-flat” scenario for 2027 and adjusting valuations of the group accordingly. (Fierce Healthcare)
Coming up next: February 25 is the deadline for submitting comments on the proposal, followed by the rate announcement set for on or before April 6. These two dates will determine the pricing insurers can set for 2027 and the potential scale of benefit reductions. (Centers for Medicare & Medicaid Services)
