UnitedHealth (UNH, Financial) just dropped its 2024 earnings report, and at first glance, everything looks solid. Revenue climbed 8% year-over-year to $400.3 billion, and adjusted net earnings landed at $27.66 per share. The company reaffirmed its bullish 2025 guidance, projecting up to $455 billion in revenue and net earnings as high as $28.65 per share. But Wall Street wasn't impressed. The stock tumbled 4.6% this morning as investors zeroed in on rising medical costs, a stubbornly high medical loss ratio of 87.6%, and slower-than-expected Medicare enrollment. Optum, its healthcare services arm, grew 9.4% to $65.1 billion in the fourth quarter, but that still missed analyst expectations.

So, what's spooking investors? The big one: rising costs. Hospital billing, high-cost drugs, and Medicaid reimbursement challenges are squeezing margins. CEO Andrew Witty, trying to calm nerves, doubled down on the company's strategy, assuring investors that these headwinds were already factored into the 2025 outlook. UnitedHealth is also making a bold move to pass 100% of drug rebates to customers by 2028, a shift that could shake up pharmacy benefit managers. Despite all this, sector-wide jitters dragged down healthcare giants like Humana, CVS Health, and Elevance Health alongside UNH.

Here's the thing—UnitedHealth isn't exactly in trouble. Cash flow remains strong at $24.2 billion (1.6x net income), and the company is adding patients at a steady clip, with 600,000 new value-based care enrollees in 2024. Yes, cost pressures are real, but UNH has the scale and financial muscle to weather the storm. The question for investors: Is this an overreaction, or is the market signaling deeper concerns about healthcare margins in 2025? Buckle up—this one's going to be a story to watch.