After suspending guidance and changing leadership last May, investors now want to know how UnitedHealth Group is going to weather the profit headwinds which have hobbled its Medicare Advantage program. Bertha Coombs previews the health care giant’s second quarter earnings report.

UnitedHealth Group is preparing for a critical earnings report as it faces significant challenges, particularly in its Medicare Advantage program. The company has experienced a leadership shakeup, with CEO Andrew Witte stepping down and chairman Steve Hemsley returning as chief executive. UnitedHealth has withdrawn its previous financial guidance, citing collapsing profits in Medicare Advantage due to stricter billing regulations known as V-28, which have reduced margins for both its insurance arm and its OptumHealth doctor network.

Investors are focused on how UnitedHealth plans to address these losses and restore confidence, with particular attention on the company's guidance for the coming year. Analysts' earnings estimates for the full year vary widely, and anything below $18 per share is seen as problematic. The company also acknowledged a Department of Justice probe into its billing practices, adding further uncertainty. UnitedHealth's performance is having a notable impact on the Dow Jones Industrial Average, acting as a significant drag on the index.

Stakes high for UnitedHealth Group’s Q2 earnings

It's really for the health insurers. They're weathering a perfect storm of higher costs across all of their government health plans. When it comes to Medicare, UnitedHealth is at the eye of that storm. In mid-May, CEO Andrew Witte stepped down. The company withdrew guidance and chairman Steve Hemsley was reinstated as chief executive, vowing to earn back investor trust and confidence. The crux of the problem, collapsing profits in the company's Medicare Advantage program. Insurers and doctors used to be able to add a general diagnosis, like an overall heart condition, to bill for higher reimbursement, like adding a little extra shot of espresso for extra margins. Under new rules known as V-28, billing codes have been tightened up. So less caffeine for those margins. Along with United's insurance profits, that's now hitting OptumHealth. It's army of 90,000 doctors because it's making it harder to reap that extra margin with extra codes. Tomorrow, investors want to hear how the company is going to stash the losses and turn things around. And one big measure of that is going to be 2025 guidance. Analysts' estimates range from $18 to $26 a share for the full year, with consensus at nearly $21. Mizzou host Anne Hines says anything less than $18 is going to be a big problem. Billing practices are also at the center of the DOJ probe, which the company did acknowledge last week. You can read more in my UnitedHealth earnings preview on CNBC.com. A lot of headwinds. We have to definitely read that. So I do have to say, Bertha, you listed a number of headwinds and issues for this company. Do we think we're at basically a floor? Is there anything else that can really go wrong or anything else that's pending that could also impact this business? That is the issue. I mean, but this is at the core. Basically, their doctor unit, OptumHealth, was always sort of their secret sauce that made it better for them in terms of their performance in Medicare Advantage and everybody else. Now that is a big anchor and a big drag. One of the things everyone is trying to figure out is how they kind of missed the boat. We're in the second year of this V-28. All of their competitors had problems last year, so they cut back, didn't offer as generous benefits, and UnitedHealth inherited a lot of their patients. So we're going to see whether they are ready to turn this so that they don't have this problem again next year. By the way, one of the bigger components in the Dow as well, weighing on the Dow is very surprising, actually. The Dow is so close to a new record high, considering a stock of this size, actually. But it's a 1400 point drag this year.

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