UnitedHealth Group posted weaker-than-expected first quarter earnings, and lowered its full year profit guidance, sending shares in the country’s biggest health insurance group sharply lower in early Thursday trading.
UnitedHealth (UNH) said said adjusted earnings for the three months ended in March came in at $7.20 a share, a 1.7% increase from the same period last year but 9 cents shy of the Wall Street consensus forecast.
Group revenues rose 9.5% to $109.6 billion, again missing analysts’ estimates of a $111.6 billion tally. Optum revenues rose 4.6% from last year to $63.9 billion.
Optum, which UnitedHealth purchased in 2011, is the main driver of the group’s overall earnings. It’s the nation’s largest physician employer, with around 90,000 doctors under its wing.
UnitedHealth’s medical-cost ratio, meanwhile, rose by around half a percentage points from last year to 84.8%, suggesting that it paid out a larger portion of its collected premiums on insurance claims.
Overall premiums were up 11% to just under $78 billion over the three months ending in March, while medical costs rose 11.7% to $65.75 billion.
Related: UnitedHealth stock slides as Medicare Advantage concerns deepen
“UnitedHealth Group grew to serve more people more comprehensively but 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%,” said CEO Andrew Witty.
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The group also lowered its full-year profit forecast to between $24.65 and $25.15 per share, down from its early January estimate of between $29.50 to $30 per share.
UnitedHealth said the change reflects ‘heightened care activity indications within UnitedHealthcare’s Medicare Advantage businesses” and “a greater-than-expected impact to current and new complex patients from the ongoing Medicare funding reductions enacted by the previous administration.”
UnitedHealth shares were marked 17.5% lower in premarket trading immediately following the earnings release to indicate an opening bell price of $482.84 each, a move that would drag the stock into negative territory for the year.