UnitedHealth Stock: Is the Market Overreacting to Lower-Than-Expected Medicare Rates?

Shares of UnitedHealth Group (NYSE: UNH) person been falling rapidly aft the institution reported its latest net numbers. This is adjacent aft an already pugnacious twelvemonth successful 2025, erstwhile the wellness security elephantine mislaid 35% of its value.

The marketplace has been particularly bearish connected the banal owed to concerns astir lower-than-expected increases successful Medicare Advantage rates. Is this an overreaction, and has UnitedHealth Group banal go an incredibly inexpensive buy, oregon is it successful information of going adjacent lower?

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In 2025, UnitedHealth's full-year gross totaled $447.6 billion, up 12% from the erstwhile year. The fastest-growing country of its concern was its Medicare & status segment, which roseate by astir 23%, to $171.3 cardinal successful revenue, accounting for a small implicit 38% of the company's apical line. And the conception has risen by 89% since 2020, backmost erstwhile its gross totaled $90.8 billion.

Medicare has undeniably played a large relation successful UnitedHealth's maturation successful caller years. The Trump administration's connection to support Medicare Advantage rates level successful 2027 would person a worldly interaction connected the healthcare company's business, and investors are justified successful being acrophobic astir the stock.

UnitedHealth is already bracing for a pugnacious twelvemonth successful 2026, with its guidance calling for its apical enactment to travel successful astir $439 billion, which translates to a diminution of 2%. It's a important improvement for a concern that has had nary occupation increasing successful caller years. And now, connected apical of it all, there's besides the looming occupation of Medicare Advantage rates being level for 2027.

If UnitedHealth efficaciously becomes chiefly a dividend banal that investors bargain simply for its output (currently astatine 3.2%), arsenic opposed to its maturation prospects, past its valuation whitethorn bespeak that and commercialized astatine a little net multiple. As a result, determination could so beryllium much of a diminution to travel for UnitedHealth. Not lone could its net worsen owed to persistently precocious aesculapian costs and constricted gross growth, but its net aggregate whitethorn besides stay modest. Although the banal whitethorn look cheap, trading astatine a price-to-earnings aggregate of conscionable 14, if UnitedHealth isn't expected to make immoderate affirmative maturation successful the adjacent future, past it whitethorn not beryllium casual to warrant paying much for the stock.