UnitedHealth Group is having its worst year in over a decade. The stock is down 39% year to date. That’s not a dip. That’s a collapse for a company that used to be the ballast of the healthcare sector. The selloff started in April after the company slashed its 2025 earnings forecast. It hasn’t recovered.
The core issue is medical cost inflation. UnitedHealth’s medical cost ratio is now running between 86% and 87%. That means for every dollar in premiums, they’re spending nearly 87 cents on care. That’s up from 82% just two years ago. The margin compression is real. The company blamed higher-than-expected outpatient and physician service demand, especially in Medicare Advantage. That’s the part of the business that was supposed to be stable.
In April, UnitedHealth cut its full-year profit forecast from $29.50 per share to a range of $26 to $26.50. Wall Street was expecting $29.73. The miss was wide. The stock dropped 19% in a single day. That move wiped out over $60 billion in market cap. It also dragged down the entire managed care sector. Humana, Elevance, CVS, and Centene all sold off in sympathy.
The company is trying to pivot. It’s offloading its Latin American unit, Banmedica, with binding bids expected by July. That deal could bring in around $1 billion. But that’s a sideshow. The real problem is domestic. Medicare Advantage is under pressure. Medicaid margins are thin. Commercial pricing is getting more competitive. And the regulatory environment is tightening.
Optum, the services arm, is still growing. But it’s not enough to offset the drag from insurance. The Change Healthcare cyberattack earlier this year didn’t help. It disrupted claims processing and triggered a wave of provider frustration. That’s not a headline risk. That’s operational damage.
Dividend yield is now 2.88%. That’s the highest it’s been in years. But that’s because the stock is down, not because the payout is rising. The payout ratio is still under 40%, and free cash flow is strong. So the dividend is safe for now. But the trust is not.
Clients are watching. Competitors are circling. If UnitedHealth wants to win back share, it may need to cut policy rates and rebuild goodwill. That’s not a Wall Street strategy. That’s a Main Street one.
Sources
https://www.marketbeat.com/originals/unitedhealth-stock-dips-is-this-a-value-buy-opportunity
https://www.cnbc.com/2025/04/17/unitedhealth-lowers-annual-profit-forecast-on-higher-costs.html
https://finance.yahoo.com/news/unh-dividend-risk-due-falling-042250250.html
https://www.spglobal.com/_assets/documents/ratings/research/101612714.pdf