UnitedHealth implements strategy to boost margins amid rising costs

UnitedHealth is implementing a ‘shrink-to-grow’ strategy to improve margins and address recent operational challenges. The company reported an adjusted earnings per share of $4.69 for the third quarter, exceeding consensus estimates of $4.12.

The insurer, the largest provider of Medicare Advantage in the United States, has faced significant pressure due to rising medical costs and increased service utilization by elderly insured members starting in 2024. Additionally, the company has dealt with legal scrutiny from the US Department of Justice regarding Medicare billing practices, a major cyberattack on its subsidiary Change Healthcare, and the murder of its CEO in December 2024.

Under new management led by Stephen Hemsley, UnitedHealth is focusing on cost reduction, balance sheet strength, and credibility. While these measures aim to improve adjusted earnings per share, the company faces ongoing pressure on revenue and total insured numbers.