UnitedHealth Group is a multinational health and well-being company that operates primarily in the United States and internationally through its health benefits business. As can be seen in the share price of UnitedHealth Group's ("UNH") trending over the past few years, 2025 saw a disastrous collapse of it's share price to a record 5 year low of U$234.60 at 1 given time. While it has since recovered to the level of approximately US$310 per share, it is unfortunately just a faint shadow of its former glorious day. I have decided to take up a a very tiny position in UNH as I think that in the long run, its experienced management team should be able to resolve all current challenges and its earnings should at least go back up by 50% even if not 100%.
Recent decline in UNH’s share price stems from a combination of operational pressures, regulatory concerns, and leadership instability:
(1) Skyrocketing medical costs
The company’s medical cost (loss) ratio surged to 89.4%, up from around 82% in 2022, severely eroding margins. Operating margin dropped from 8.8% to approximately 7.3% over the last year.
(2) Collapsed earnings guidance & missed expectations
UNH slashed its full-year adjusted EPS forecast from about $30 to just $16—a ~47% downward revision—falling well below analyst expectations. In Q2 2025, it reported EPS of $4.08 vs. ~$4.48 expected, disappointing investors despite revenue being roughly in line.
(3) $6.5 billion of unexpected medical costs
This oversized burden, mainly impacting Medicare Advantage and Medicaid segments, triggered sharp margin contraction.
(4) DOJ investigations and regulatory scrutiny
UnitedHealth confirmed both criminal and civil investigations by the U.S. Department of Justice concerning its Medicare billing and practices—heightening uncertainty.
(5) Leadership upheaval and reputation risks
The abrupt resignation of CEO Andrew Witty and the fallout from the high-profile murder of an executive, Brian Thompson, who was shot and killed while walking to an investor conference further rattled investor confidence.
Parting Thoughts
It had been reported that Warren Buffett’s Berkshire Hathaway purchased approximately 5 million shares of UNH during Q2 2025, investing around U$1.57 billion, which means an average entry price of about $314 per share. Based on its share price of US$307 per share as at 3 September 2025, this means that one is buying in at a lower price than Berkshire. I have initiated a tiny position of 2 shares into UNH. Will accumulate further if the price of UNH went back into a slump below US$300 per share.
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