UnitedHealth Group Is on the Mend

In April 2025, UnitedHealth Group shares dropped 22% after its management slashed full-year earnings guidance by 12% following weak quarterly performance. Weeks later, the CEO stepped down. The downturn was driven by an unexpected surge in medical care utilization as post-pandemic patient demand for deferred procedures rebounded.

UNH’s stock traded well over $500 a share for years and even topped $600 in 2024. Following its weak report, the share price plunged below $300 in May 2025.

Shortly after, the board brought back its former CEO Stephen Hemsley. Decisive insider buying followed immediately. Hemsley himself purchased $25 million of UNH stock for his personal account, the CFO bought $5 million, and three board directors added to their ownership stakes as well.

The rationale for a recovery seemed straightforward. Because many insurance contracts are repriced annually, the miscalculated claim costs of 2025 could be systematically recalibrated into policy pricing for 2026.

Aggressive insider buying, paired with an operational headwind that appeared transitory rather than structural, put the stock firmly on our radar. On May 20, 2025, we purchased Canadian Depository Receipts (which capture the performance of UNH shares while hedging out currency volatility) for suitable client accounts.

Seventeen months after our initial purchase, we’re happy with the recovery as the stock price now trades above $400 a share once again.

Financial results released on October 13 prove that UNH is on the mend. Adjusted earnings climbed 61% year-over-year, comfortably exceeding analyst expectations, and management raised full-year profit guidance.

Even after the rebound, UNH remains attractively priced at roughly 17 times earnings, a double-digit discount to its valuation since Covid. Comparing that multiple to management’s projected 13% to 16% earnings growth yields a price-to-earnings-to-growth (PEG) ratio close to 1x (a discount in our view for a company of this caliber).

In addition, UnitedHealth Group’s Medical Loss Ratio, which is calculated by dividing medical claims paid by premium revenue received, is projected to sit around 88% this calendar year, up from the low-80% baseline maintained until recently. As contract pricing catches up with actual care demand, any reduction in this ratio should expand profit margins and justify a higher valuation and stock price in the future.

We will continue to accumulate UNH for new client portfolios while holding the position for existing accounts.

-written by Jeff Pollock