UnitedHealth stock plunges 20% on a shock forecast cut — and cracks the Dow wide open

UnitedHealth (UNH-1.96%) shocked investors Thursday by cutting its 2025 profit forecast — and offering a sobering diagnosis: Older Americans are using more healthcare than expected, and the government is paying less to cover it.

The insurance giant lowered its full-year adjusted earnings guidance to $26-$26.50 per share, down from $29.50-$30. That’s a major revision for one of the most stable companies in the Dow Jones Industrial Average — and it sent UnitedHealth’s stock plunging almost 20% in morning trading. That helped drag the Dow down 437 points, or about 1.1%, even as the S&P 500 and the Nasdaq ticked up.

Vertical integration causes bite across the board

At the heart of the miss is United’s Medicare Advantage business, where the company offers private insurance plans for seniors. In Q1, patients flooded into outpatient care — routine doctor visits, diagnostics, non-emergency treatments — at far higher levels than anticipated. Because Medicare Advantage runs on fixed payments, this surge in use chipped away at profit margins.

But the real sting?

United got squeezed on both sides of its business. As an insurer (via UnitedHealthcare), the company faced soaring medical costs. And as a provider (via its Optum Health clinics and care teams), it saw reimbursements disappoint — due to unexpected patient behaviors and ongoing Medicare funding cuts.

In short: United paid out more and got paid less.

“We did not perform up to our expectations,” CEO Andrew Witty said. “But we are aggressively addressing those challenges.”

When the safe bets stumble, the whole index feels it

The selloff shows how fragile confidence is in an uncertain policy environment. UnitedHealth’s stumble lands just a day after fellow Dow component Nvidia’s (NVDA+0.54%) 7% plunge and hints that no part of the market — even the biggest names — is immune from the knock-on effects of rising healthcare costs, policy shifts, and unpredictable use trends.

And on Thursday, for the Dow, where UnitedHealth is a heavyweight, the fallout hits even harder.