SOTS 2nd Hour: Tale of 2 Healthcare Stocks (UNH, LLY), CSX & Charles Schwab CEOs, Plus: Sen. Elizabeth Warren Talks Tariffs 04/17/25

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David Faber (0:44)

Market insight and analysis. You're listening to the opening bell of CNBC Squawk on the Street.

Sara Eisen (0:56)

Good Thursday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live from Post 9 of the New York Stock Exchange. Stocks are doing okay. We're building on some gains this morning, except for the Dow. That's a United Healthcare story. Dow's down 439 points. The S&P 500 is higher by about 4 tenths of a percent. The NASDAQ coming back, we lost a lot of ground yesterday, but it's up about a quarter of a percent right now. Just show you what's happening in Treasuries. Mixed picture, 10 year and 30 year yields higher. Short end, you're seeing some buying with a 2 year yield 3.7. Did get some better jobless claims data for the past week.

Carl Quintanilla (1:33)

Let's get to the two big stock stories of the day. UNH, as Sarah said, on pace for their worst day since 2008 after slashing their forecast, while new obesity pill data is helping Lilly shares aim for their best daily performance since 23 Got Bertha Coombs and Angelica Peebles tracking the action this morning. Bertha, let's begin with you.

Bertha Coombs (1:52)

Carl, it's a rare miss by United Health in both the top and the bottom line, and they say it's driven by higher medical costs. They're attributing it to some of the issues left over from the Biden era. This in the Medicare Advantage business. Now, the premiums and reimbursement rates that are lower have resulted in a lot of patients switching insurers because a lot of insurers left different markets. And as a result, a lot of those patients are paying higher premiums. And United says what they are seeing in their physician groups is that a lot of those people are utilizing more care, in a sense, maybe trying to get more of their money's worth. But they are also seeing this in their own Medicare Advantage plans.

SPEAKER_8 (2:39)

We had planned for 2025 care activity to increase at a rate consistent with the utilization trend we saw in 2024 Instead, though, first quarter 2025 indications suggest care activity increased at twice that rate. Increases in physician and outpatient services were most notable and inpatient to a lesser extent.

Bertha Coombs (3:07)

Now, that Medicare Advantage rate, that medical care cost rate only came in at 84.8%, which is well below what they had forecast for the full year. But given the trends that they're seeing and the fact that people actually use more care later in the year, they are now raising the full year forecast that medical care ratio, how much of the premium goes towards medical costs to 87.5%. That is definitely weighing on their peers who are likely experiencing some of the same things. But one of the silver linings, according to United CFO John Rex, is that seeing this trend early is helping them as they put together their rates for 2026, which are due in June.

David Faber (3:53)

Back over to you. Yeah, Bertha, it's David. In terms of the competitive set, a week ago, I think it was, CVS reiterated its guidance when it changed out its CFO. I just wonder, is this more of a UNH specific problem, particularly because they didn't seem to share in some of the pain that many of the others had last year when it came to Medicare Advantage?

Bertha Coombs (4:18)

Yeah. One of the things that it might be is the fact that they do have that huge group of physicians in the Optum Health side. They have gained a lot of patients that they didn't know, patients who they say didn't use as much care in the second half of last year and suddenly are using a lot more. So that's part of what's weighing on the business. But overall, as the United Health goes, so go their peers generally. They've seen this elevated particularly at the end of the first quarter.