Healthcare stocks are getting shellacked today, pressured by a double-digit percentage drop in United Healthcare (NYSE: UNH). UNH is shaving off nearly 25% of its value today and sinking all healthcare ships, with Amgen (NYSE: AMGN) and Humana (NYSE: HUM) seeing declines of 2.6% and 6.8%, respectively.
The markets are ignoring Humana’s dividend announcement and are instead fixated on UNH’s disappointing quarterly earnings results, not least Medicare challenges that are getting worse, not better, at least in the short term. UNH is seen as an industry leader, and its troubles serve as a stark reminder that Medicare could become an even wider issue for other healthcare companies.
UNH Ignites Sell-Off
United Healthcare’s Q1 results were a mess, falling short of Wall Street’s expectations and throwing in some further worrying signs about the future. UNH’s adjusted EPS came in at $7.20 per share, falling short of consensus estimates of $7.29 per share. Worse, the healthcare leader lowered its full-year 2025 outlook and is now expecting adjusted EPS between $26 and $26.50 per share compared with a previous forecast of $30 on the high-end. UNH blamed rising Medicaid costs that caught the company off guard, a wider issue that has been plaguing the healthcare sector but that has worsened at UnitedHealth.
The healthcare provider suffered from patients increasingly turning to physician and hospital outpatient services, in response to which CEO Andrew Witty acknowledged the company “did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead, and return to our long-term earnings growth rate target of 13 to 16%.”
AMGN and HUM Follow UNH Lower
AMGN is getting punished alongside UNH with a nearly 2% decline today. At $277 per share, this dividend-paying stock has been on a roller-coaster ride this year. On the one hand, it is facing an antitrust lawsuit filed by Sandoz over Amgen’s arthritis patent, but on the other it received a regulatory green light for its small cell lung cancer drug.
Adding insult to injury, Humana is falling almost 7% today despite the board of directors declaring a quarterly dividend to shareholders. The company will pay a cash dividend of $0.885 per share for a dividend yield of 1.2%.
What It Means
Healthcare companies could be experiencing some short-term pain before eventual long-term gain. This is because the healthcare industry is gearing up to allow a federal rate increase for insurers through the Medicare Advantage Program, which could turn the Medicare headwinds into tailwinds for stocks like UNH, AMGN and HUM in 2026. Time will tell.
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