UnitedHealth Stock Plunges 20%—Here's What's Driving the Huge Decline

Core Insights - UnitedHealth Group's stock dropped 20%, reaching a five-month low, following disappointing earnings and unchanged Medicare rates announced by the Trump administration [1] - The Centers for Medicare and Medicaid Services (CMS) estimated a mere 0.09% increase in payments to private Medicare Advantage plans for the next year, significantly lower than previous years [1] - Other health insurers, including Humana, CVS Health, and Elevance Health, also experienced sharp declines in their stock prices [1] Group 1: Company Performance - UnitedHealth's fourth-quarter revenue was reported at $113.2 billion, falling short of expectations, while adjusted earnings per share met forecasts at $2.11 [1] - The company anticipates total revenue exceeding $439 billion in 2026, reflecting a 2% year-over-year decrease due to planned right-sizing [1] - UnitedHealthcare expects to insure up to 2.8 million fewer people this year, with Medicare Advantage projected to account for nearly half of that reduction [1] Group 2: Market Context - Healthcare stocks have struggled in recent years, impacted by high healthcare costs and political pressures regarding affordability [1] - The healthcare sector had previously shown momentum but is now facing potential headwinds due to political risks and consumer frustrations [1] - Investors are cautious due to the Trump administration's focus on lowering healthcare costs and the criticism from Health Secretary Robert F. Kennedy Jr. [1]