This article first appeared on GuruFocus.
UnitedHealth Group (NYSE:UNH) took a sharp hit Tuesday, sliding alongside its peers after quarterly results and a soft revenue outlook added to the growing sense that managed care is in a rough stretch.
The stock fell about 12% in premarket trading, while Humana dropped roughly 14%, as investors reacted to another reminder that Medicare pricing pressure is squeezing the entire industry. UnitedHealth delivered adjusted EPS of $2.11 for Q4, right in line with expectations, but revenue of $113.2 billion missed estimates by about $520 million despite growing nearly 12% year over year. That miss was enough to spook a market already on edge.
Looking ahead, guidance did little to calm nerves. UnitedHealth expects more than $439 billion in revenue for 2026, well below the roughly $456 billion Wall Street had penciled in, even as adjusted EPS guidance of over $17.75 came in roughly as expected. Costs remain a problem, with the medical care ratio jumping to 92.4% from 89.1% a year earlier, and a $1.6 billion post-tax restructuring charge weighing on the quarter.