UnitedHealth Shares Plunge on Bleak Revenue Forecast and Regulatory Pressure

Monday witnessed a dramatic sell-off in UnitedHealth Group stock, marking its most severe single-day decline in nearly a year. The downturn was triggered by a disappointing long-term revenue outlook overshadowing solid quarterly results, compounded by a new regulatory proposal threatening the core profitability of the Medicare Advantage sector.

The healthcare giant reported adjusted earnings per share of $2.11 for the fourth quarter of 2025, slightly exceeding analyst expectations of $2.10. For the full year 2025, revenue climbed 12% to $447.6 billion.

However, the guidance for 2026 delivered a severe shock. Management projected revenues exceeding $439 billion, representing an approximate 2% decline and falling far short of the $454.6 billion analysts had anticipated. This would be the company's first annual revenue drop since 1989. Chief Financial Officer Wayne DeVeydt, in an interview with CNBC, attributed the forecast to three primary factors: divestitures in the United Kingdom and South America, a loss of over 3 million U.S. members, and the expiration of a Medicare coding adjustment that alone carries a $6 billion cost.

Further pressure comes from an expected reduction of 1.3 to 1.4 million Medicare Advantage members in the current year. The fourth quarter was also burdened by a $1.6 billion after-tax special impairment charge related to the Change Healthcare cyberattack and associated restructuring costs.

Should investors sell immediately? Or is it worth buying Unitedhealth?

Sector-Wide Sell-Off Following Medicare Proposal

Adding fuel to the fire, the U.S. Centers for Medicare & Medicaid Services (CMS) unveiled a proposal just one day before UnitedHealth's earnings. The plan suggests raising average payments for Medicare Advantage plans in 2027 by a mere 0.09%, a figure drastically below the 4% to 6% increase Wall Street had projected. CMS head Dr. Mehmet Oz stated the move aimed to "avoid unnecessary taxpayer expense."

The market reaction was immediate and brutal. UnitedHealth equity plummeted as much as 19% to $282.45 at its low point. The broader industry shed approximately $80 billion in market value. Rival Humana also tumbled 19%, while CVS Health declined 11%, and Elevance Health fell between 5% and 11%.

Leadership Confident, But Recovery Timeline in Question

Stephen Hemsley, who returned as CEO in 2025 following the departure of Andrew Witty, struck a reassuring tone: "We have addressed our challenges head-on and ended 2025 a significantly stronger company." Nevertheless, analysts expressed caution. Morningstar's Julie Utterback warned that "investors hoping for a quick turnaround may need to wait longer."

All eyes are now on April 6, 2026, when the CMS is scheduled to announce final Medicare Advantage payment rates. It remains uncertain whether adjustments will be made to the initial proposal before then. For UnitedHealth, this date is pivotal. Following its historic share price collapse, the company must demonstrate that its weak forward guidance is not the start of a prolonged period of difficulty.