UnitedHealth Group (UNH), once a pillar of stability and growth in the healthcare sector, has seen its stock price plunge nearly 50% in just six months, erasing billions in market cap and rattling investor confidence. From its 52-week high of $630.73, the stock has nosedived to around $311, prompting many to ask: Is this stock broken—or is the company itself fundamentally broken?
In this breakdown, we'll cover what’s gone wrong, why sentiment is this bad, and whether now could actually be the best time in over a decade to consider buying.
Why UNH Stock Is Getting Crushed
A perfect storm of negative catalysts has slammed UnitedHealth. Let’s walk through them:
1. The Largest Healthcare Data Breach in U.S. History
It began with a cyberattack on UnitedHealth’s tech unit (Change Healthcare), first detected on February 21, 2024, which impacted over 190 million people. This breach is now considered the most severe healthcare data breach in U.S. history and continues to evolve negatively.
2. DOJ Billing Probe
Fast forward to February 2025, and the U.S. Department of Justice launched a probe into Medicare Advantage billing practices, raising questions about overpayments and reimbursement fraud. This triggered a 7% single-day drop, and the investigation remains unresolved.
3. CEO Scandal & Sentiment Hit
Sentiment took another blow in December 2024 when UnitedHealth Insurance CEO Brian Thompson was involved in a high-profile incident outside a New York City hotel. While the situation was largely PR-driven, it added another layer of reputational damage just as the company was reeling from the hack.
4. Earnings Miss + Downward Guidance
Then came the first earnings miss since the 2008 financial crisis. UNH missed on both top and bottom lines in Q1 2025 and lowered its full-year outlook due to higher-than-expected medical costs and operational disruption from the cyberattack.
The company suspended its 2025 guidance, citing higher-than-expected medical costs and increased care utilization—particularly among new Medicare Advantage members. This raised concerns about future profitability.
According to data from Finch.io (link in the description for a free trial and discount), UnitedHealth outlined three main issues driving its revised outlook:
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A larger-than-expected impact from the health status of new members.
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Accelerated utilization in Medicare Advantage.
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Early signs of a broader trend of higher care costs, especially among complex patients.
In essence, when more people use their insurance—especially for expensive or frequent treatments—it drives up costs and compresses margins. While these costs are currently focused on outpatient and physician services, UnitedHealth is anticipating further spread, and they’re warning investors that this may not be a short-term issue.
5. CEO Resignation & Forecast Suspension
On May 13, 2025, CEO Andrew Witty abruptly stepped down, and former CEO Stephen Hemsley took the reins. UNH also suspended its 2025 outlook entirely, citing ongoing cost uncertainty. That’s after having already revised it downward just weeks earlier.
6. Political Headwinds
President Biden’s recent executive order on drug pricing has also hammered pharmacy benefit managers (PBMs), another key part of UNH’s business, further weighing down sentiment.
Is the Business Broken?
Despite the chaos, UNH is not going out of business.
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It's the 5th largest U.S. employer, with over 400,000 employees.
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It remains highly profitable, generating $28B in cash from operations and $55,000 net income per employee.
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It sports a non-GAAP P/E of 13.5, and pays a 2.68% dividend with a 30% payout ratio.
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Dividend growth has continued for 15 straight years, with a 5-year CAGR of 14.2%.
Some Positives Amid the Concerns
Despite the negative reaction, there were a few positives worth noting.
UnitedHealth stated that it aims to return to its long-term EPS growth range of 13%–16% and restore its target margin range by 2026 (estimated in the 3%–5% range). They didn’t promise it, but they didn’t walk away from those targets either—which is cautiously encouraging.
They also emphasized the strength of value-based care and their continued efforts to engage with new patients, indicating that they’re focused on long-term outcomes despite near-term headwinds.
Broader Context and Risks
UnitedHealth and other healthcare stocks are under increased scrutiny, especially as the current U.S. administration ramps up regulatory pressure. Policies aimed at reducing healthcare costs and improving consumer outcomes could reduce future profitability and investment in healthcare innovation.
This is a critical long-term risk. If healthcare companies expect lower returns, they may scale back investment in systems and technologies that improve patient outcomes, slowing innovation across the industry.
That said, healthcare is a non-cyclical, essential service. People seek care regardless of whether we’re in a recession or a booming economy, making the long-term demand for healthcare relatively stable and resilient.
Valuation: A Decade-Low Entry Point
Right now, UNH trades at a P/E ratio of ~13.5, compared to a historical range of 17–25 over the last decade. The last time UNH was valued this cheaply was in 2013, as the economy was climbing out of the financial crisis.
Analyst Ratings Remain Bullish
Despite the turmoil:
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22 Buy ratings
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3 Holds
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0 Sells
The average price target is $559, offering nearly 80% upside. Even Morgan Stanley reiterated a $563 target just this week.
Technical Analysis & Price Levels to Watch
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The stock has sliced through support at $346 (S2).
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Current Fibonacci support levels suggest a potential bottom around $267–$285.
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That said, psychological support around $300 may attract long-term buyers.
Valuation: My DCF Model
Let’s turn to valuation.
According to my proprietary discounted cash flow model, I estimate UnitedHealth’s intrinsic value per share around $600, compared to the current market price of just $311—a significant margin of undervaluation.
In my model:
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I used a higher beta of 0.8 (vs. the company’s ~0.6) to reflect increased risk.
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I applied a cost of debt of 8.5%, which is a conservative assumption given UnitedHealth’s strong cash flow.
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I also lowered long-term growth assumptions to account for current headwinds.
Despite those conservative inputs, the valuation still indicates strong upside potential.
Forward P/E Comparison
Looking at forward earnings multiples, UnitedHealth is trading at a forward P/E of 11–12, which is the lowest level in over a decade, even lower than during the COVID-19 panic in 2020.
Yes, the company faces greater regulatory and operational risks, but the valuation now reflects much of that uncertainty.
So, Is UNH a Buy?
If you’re a long-term investor who can stomach short-term volatility, UNH is starting to look like a rare value opportunity in the mega-cap space. Yes, risks remain—including continued regulatory scrutiny, rising costs, and lack of near-term visibility—but the long-term fundamentals are intact, and valuation is compelling.
The company is likely to return to growth in 2026, but as we know, Wall Street is focused on the next 6–12 months, not 18–24 months out. That’s your edge.
Final Verdict: Is UNH a Buy?
Yes — I rate UNH a Buy (with caution).
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Short-term risk is high
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Near-Term Risk: High
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Sentiment is awful
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But valuation is compelling, and the dividend is safe
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For long-term, dividend-focused investors, this is one of the best setups I’ve seen in a while
Dollar-cost averaging into a blue-chip name like this—at these levels—might not feel good, but value rarely does at the bottom. If you’re looking for a dividend aristocrat trading at a decade-low valuation, this might be your Gold.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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