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$UnitedHealth(UNH)$

United Health Group’s Quarterly Results: Buy the Dip or Move On?

United Health Group recently reported quarterly earnings that disappointed investors, sending the stock down over 7%. As someone who has had this stock rated as a buy since its steep drop earlier this year (when it fell 40-50% from all-time highs), I’m naturally disappointed by this decline.

However, digging into the financial results, there were still some positives worth highlighting—which I’ll break down in this video. I’ll review the company’s latest earnings, analyze the key takeaways, and update my recommendation: Is United Health still a buy, or is it time to cut losses and move on? Let’s dive in.

Key Takeaways from United Health’s Earnings

United Health stated they’re serving more people than ever but fell short of expectations. Management is aggressively tackling these challenges to return to their long-term earnings growth target of 13-16%. Even if growth moderates to 10-13%, I believe the stock could still deliver strong returns at today’s prices—if they can hit that range.

Guidance Update: After suspending guidance earlier this year, United Health now expects 2025 net earnings of $24-$25 per share—a significant cut from their late 2024 forecast. That said, reinstating guidance is a positive. Reducing uncertainty typically lowers risk, which investors appreciate.

Why Did United Health Underperform?

The company cited two major issues:

1. Higher-than-expected Medicare Advantage costs—usage and expenses surged beyond projections, and pricing didn’t adjust quickly enough to offset this.

2. Shifts in Optum Health’s member profile—lower engagement from certain plans led to reimbursement challenges.

In short, United Health misjudged cost trends and customer behavior, squeezing profitability.

The Bigger Picture: Industry Challenges

The U.S. healthcare sector is undergoing major changes under new regulations, with stricter cost controls and shifting eligibility for government-funded plans. These headwinds are impacting the entire industry—and United Health was already navigating turbulence before these added pressures.

Silver Linings in the Report

Despite the challenges, the business isn’t collapsing:

• Revenue grew nearly 10% YoY, from $99.8B to $109.6B.

• Operating income rose from $7.9B to $9.1B.

• Strong cash flow: $5.5B generated in Q1.

• Customer growth: +700K in commercial benefits, +545K in senior/complex care (expected to reach +800K in 2025).

So, while results fell short of expectations, the core business is still growing.

Valuation: Is the Stock Cheap?

My discounted cash flow model suggests an intrinsic value of $558—well above the current ~$261 share price. Meanwhile, fiscal.ai (my go-to data tool—check the description for a discount) shows a forward P/E of 12.7, reinforcing the stock’s relative undervaluation.

Final Verdict: Buy, Hold, or Sell?

Yes, United Health’s 2025 has been rocky, but I believe the long-term thesis holds. If they can stabilize earnings growth in the 10-13% range, today’s price could look like a steal in hindsight.

Recommendation: I’m maintaining my buy rating on United Health Group after this earnings dip.