UnitedHealth Group posts highest-ever earnings but sees sharp drop in profits, names new insurance CEO
UnitedHealth Group earned $400.3 billion in 2024 — an all-time record for the company — though the company’s net income of $14.4 billion was the lowest in five years, due in part to costs associated with the cyberattack on subsidiary Change Healthcare and other factors that increased UnitedHealth’s medical loss ratio (MLR).
In 2023, UnitedHealth had total revenue of $371.6 billion (8% less than in 2024) and net profit of $22.4 billion (36% higher than 2024).
After adjusting for the $3.1 billion spent in response to the cyberattack and other factors, UnitedHealth’s profit for 2024 was $25.7 billion — also a record high, Healthcare Dive reported.
UnitedHealth’s MLR for 2024 was 85.5%, up from 83.2% a year earlier.
On an earnings call, UnitedHealth’s chief financial officer, John Rex, attributed the increased MLR to a combination of challenges: a different profile of consumers than anticipated (resulting from lower-than-expected growth in UnitedHealth’s Medicare Advantage plans); Medicaid redeterminations, which left a membership with higher medical needs; the cyberattack costs; the sale of the company’s South American business; increased prescribing of high-cost drugs; and “an aggressive upshift in hospital coding intensity.”
Rex estimated UnitedHealth’s MLR for 2025 would increase again (to approximately 86.5%), even though the company expects this year’s medical costs to be similar to last year’s. He also noted that, despite increased medical costs last year, UnitedHealth trimmed its operating costs and expects those costs to improve again in 2025.
“Some of these advances [in accelerating our efforts to realize operating efficiencies and improving consumer experiences] are a result of the very early-stage impacts we are beginning to realize from AI-driven initiatives to help our customer service representatives respond to consumers’ needs more effectively and quickly,” Rex said on the earnings call.
Looking ahead, UnitedHealth affirmed the performance outlook provided in December for 2025: revenue of $450 billion or more and adjusted net earnings per share of $29.50 to $30.00.
At the start of the earnings call, UnitedHealth Group CEO Andrew Witty thanked attendees for their condolences and support after Brian Thompson, UnitedHealthcare’s CEO, was killed last month. Thompson’s death led many people to express via social media their anger and frustration with insurers.
While Witty acknowledged on the call that “the health system needs to function better” and that “it needs to be less confusing, less complex, and less costly,” he intimated that, along with insurers, health care providers and drug companies also bear responsibility for improving the U.S. health system.
“Ultimately, improving health care means addressing the root cause of health care costs,” Witty said. “Fundamentally, health care costs more in the U.S. because the price of a single procedure, visit, or prescription is higher here than it is in other countries. The core fact is that price, more than utilization, drives system costs higher.”
As an example of what UnitedHealth is doing to improve the system, Witty said the company has “advanced plans … to work with policy leaders to use standardization and technology to speed up turnaround times for approval of procedures and services for Medicare Advantage patients and to materially reduce the overall number of prior authorizations used for certain MA services.”
Witty also stated that by 2028 at the latest, Optum Rx, UnitedHealth’s pharmacy benefit manager, will pass 100% of the rebates it negotiates with drug companies on to customers.
“We will continue to encourage all of our clients to fully pass these savings directly to patients at the point of sale, as we already do for all of the people we serve in our fully insured employer offerings. This will help make more transparent who is really responsible for drug pricing in this country, the drug companies themselves,” he said.
On Thursday, UnitedHealth Group said Tim Noel, who joined the company in 2007 and most recently led UnitedHealthcare’s Medicare and retirement segment, will take on the role of CEO at UnitedHealthcare.
OUR TAKE: Like UnitedHealth’s Andrew Witty, CEO Gail Boudreaux spent several minutes at the start of Elevance Health’s earnings call last week talking about how the company is dedicated to supporting people’s health before delving into Elevance’s financial results. (See the first brief in the section below for more on those.)
She acknowledged that the “health care ecosystem is grappling with significant challenges, including rising costs, administrative complexity, and disparities in access to care” and discussed how Elevance is working to improve members’ experiences when interacting with the health care system, presumably in response to the public outrage that followed Brian Thompson’s death.
Boudreaux discussed how Elevance is addressing the challenges stemming from “evolving consumer expectations and the need for a more integrated approach to physical, behavioral, and social health.” She said Elevance is focused on streamlining processes, reducing costs, and improving members’ overall experiences.
She talked about the vital role health insurers have in keeping health care affordable by making sure their members have access to high-quality care at reasonable costs, by reducing inefficiencies and driving better health outcomes through their value-based partnerships with care providers.
She noted that Elevance offers innovative plan designs in its Medicare Advantage portfolio, most of which offer $0 copays for primary care visits and have no monthly premium.
Unlike Witty, Boudreaux did not try to shift part of the blame for the public’s discontent with the health care system to pharmaceutical manufacturers or health care providers.
Health insurers have a lot of ground to cover if they want to improve public perception of their industry, and they’re just one cog in the country’s massive health care machine.
Although the next couple of years could prove to be pivotal in terms of reshaping health care in the U.S., we remain skeptical that major improvements will take place. That would require collaboration among the health care system’s various stakeholders, including policymakers and influential lawmakers.
Health Care Rounds #177: Karthik Ganesh, CEO, OnMed
In this episode, Karthik Ganesh, CEO of OnMed, shares insights on how their OnMed Care Stations transform health care access and deploy tech-enable hybrid care to underserved communities nationwide. Watch here or listen wherever you get your podcasts.
What else you need to know
Elevance Health’s fourth-quarter profit of $418 million was less than half of the previous year’s profit for the same quarter ($856 million), reflecting higher medical costs for the company’s Medicaid members — those still eligible for Medicaid following state redeterminations tend to be sicker and therefore cost insurers more than those who lost coverage, and states are lagging in their adjustments to payment rates.
Elevance’s medical loss ratio for the fourth quarter was 92.4%, an increase from 89.2% in the final quarter of 2023. For the full year, the company’s MLR was 88.5%. At $45.4 billion, Elevance’s revenue for the fourth quarter was up 6.6% from the prior year. For the full year, the company reported revenue of $175.2 billion, up 2.9% from 2023. The nearly $6 billion in profit Elevance reported for 2024 was essentially the same as for 2023.
Novo Nordisk’s semaglutide is among the second group of drugs selected for Medicare price negotiations under a provision of the Inflation Reduction Act. Branded as Ozempic and Rybelsus for diabetes and as Wegovy for weight loss, semaglutide is one of 15 drugs slated for price negotiations this year, with updated prices to take effect in 2027. Among the other drugs in the group are four oncology drugs, including Pfizer’s Ibrance (palbociclib) for breast cancer and Xtandi (enzalutamide), three treatments for asthma and/or chronic obstructive pulmonary disease, and two other diabetes drugs — Merck’s Janumet/Janumet XR (sitagliptin and metformin) and Boehringer Ingelheim and Eli Lilly’s Tradjenta (linagliptin). The fate of the IRA’s Drug Price Negotiation Program under the new administration remains to be seen.
Separately, Teva Pharmaceuticals filed a lawsuit on Jan. 15 against the Department of Health and Human Services and CMS in which the drugmaker called the Drug Price Negotiation Program “a fiction” and claimed that CMS’ guidance for the program rewrites “critical limitations imposed by Congress in the IRA.” Teva also criticized CMS’ definition of a qualifying single source drug (i.e., one eligible to be chosen for price negotiations). The company said CMS’ “made-up” definition allows the agency to treat two or more drugs approved under separate FDA applications held by the same entity as one qualifying single source drug if the drugs have the same active molecule, regardless of when the approvals were made.
By starting the “negotiation eligibility clock” with the first drug’s approval, Teva asserted in the complaint, CMS can subject a second drug with the same active molecule to a price control immediately after it is approved rather than having to wait until it has been marketed for a set number of years, as specified in the IRA. This “expansion of price controls shortens — if not eliminates — the period during which generic and biosimilar competitors can capture market share based on what should be their lower prices,” Teva stated, adding that the IRA as enacted, along with CMS’ “unlawful guidance purporting to implement the IRA,” will cause the drugmaker to suffer imminent irreparable harm.
Teva’s Austedo/Austedo XR (deutetrabenazine), which is used to treat involuntary movements caused by tardive dyskinesia or Huntington’s disease, is on the list of 15 drugs CMS recently released for price negotiations this year.
Johnson & Johnson’s Spravato (esketamine) nasal spray received FDA approval as the first and only monotherapy for adults with major depressive disorder who have had an inadequate response to two or more oral antidepressants. Spravato was initially approved in 2019 for use in conjunction with an oral antidepressant in adults with treatment-resistant depression. Bill Martin, global therapeutic area head of neuroscience at Johnson & Johnson Innovative Medicine, said in a press release, “Treatment-resistant depression can be very complicated, especially for patients who do not respond to oral antidepressants or cannot tolerate them. … Spravato is now available as a stand-alone treatment, meaning patients may experience improvements in depressive symptoms as early as 24 hours and at 28 days — without the need for daily antidepressants.”
A large study of GLP-1 receptor agonists — the category of drugs that includes Novo Nordisk’s semaglutide and Eli Lilly’s tirzepatide, a dual-action GLP-1/GIP agonist — shows the diabetes and weight-loss drugs may be beneficial in treating a broad range of diseases and health conditions. While the findings are not entirely surprising (semaglutide was approved nearly a year ago to reduce the risk of life-threatening cardiovascular events in certain adults, and tirzepatide was approved last month as a treatment for obstructive sleep apnea), the researchers found dozens of other possible benefits associated with the drugs when comparing them with usual care.
For instance, they observed reduced risks for Alzheimer’s disease and other neurocognitive disorders, cardiometabolic disorders, coagulation disorders, infectious illnesses, respiratory conditions, schizophrenia episodes, seizures, and substance abuse. However, the drugs were also associated with higher risks for digestive issues, fainting, headaches, inflammation in the pancreas, joint pain, kidney stones, and low blood pressure. The study was published Jan. 20 in the journal Nature Medicine.
Dr. Mike Richards has been appointed as UNM Health System’s CEO, effective immediately. Dr. Richards, who served as interim CEO of the Albuquerque, N.M.-based health system since August, has been with the organization for 25 years. He succeeds Dr. Douglas Ziedonis.
What we’re reading
Medicare Reforms Necessitate More Formulary Oversight. Health Affairs, 1.23.25
Setting Public Health Priorities in the United States. JAMA, 1.24.25
The Plight of “Dual Noneligible” People in the United States. NEJM, 1.4.25 (audio interview available without subscription)
