UnitedHealth Group Inc. (NYSE: UNH) shares tumbled another 4% in premarket trading following the company's disclosure of a Department of Justice investigation into its Medicare program practices, adding to what has already been a disastrous year for the healthcare giant.
The healthcare company says it is ‘complying with formal criminal and civil requests' from the Justice Department.
UnitedHealth Group revealed it is facing a Justice Department investigation over its Medicare billing practices. The Wall Street Journal reported in May that the Department of Justice is conducting a criminal investigation into the health-care giant over possible Medicare fraud.
I recommend adding UnitedHealth Group on the pullback before 2Q25 earnings in late July, as I believe negatives are priced in and the stock is overdue for upside. Despite leadership changes and regulatory scrutiny, UNH's diversified revenue and Optum's innovation provide a resilient foundation for long-term growth. Valuation is historically low, with a forward P/E of 13.3x versus a five-year average of 20.4x.
UnitedHealth (UNH) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
UnitedHealth Group's stock has sharply declined due to an earnings miss, guidance cut, CEO exit, and rising medical costs, creating a rare value opportunity. Valuation metrics show UNH trading at deep discounts to historical and industry averages, despite strong long-term growth prospects and insider buying. UNH maintains industry-leading margins and growth, with a dominant Medicare Advantage position and vertical integration through Optum driving future earnings potential.
UnitedHealth Group (UNH) closed the most recent trading day at $282.65, moving 1.88% from the previous trading session.
Despite regulatory uncertainty and a DOJ probe, I maintain a strong buy on UnitedHealth Group due to its sector leadership and long-term potential. Key Q2 earnings watchpoints: medical cost trends, updated guidance, Optum segment performance, and potential capital deployment signals. UNH's scale, vertical integration, and fortress balance sheet make it uniquely positioned to weather industry turmoil and outperform peers.
UNH is deeply oversold, with consensus expectations set extremely low ahead of Q2, creating a setup for a relief rally on even modestly negative news. Guidance withdrawal has fueled uncertainty, but re-establishing guidance—even at lower levels—should restore confidence and attract buyers, supporting a recovery. Industry headwinds are likely transitory, with margin normalization expected by 2026; UNH's long-term EPS growth outlook remains robust.
The health insurer now expects 2025 earnings of just $30 a share, citing ongoing and industry-wide impact of elevated cost trends in ACA and Medicaid.
UnitedHealth stock has gotten cheap this year due to a slew of PR issues. Some of these issues pertain to the company's handling of health insurance claims. The company is profitable enough and has a strong enough balance sheet that it can afford to take some hits from policyholders taking their business elsewhere.
The market often misinterprets price declines as value. For Elevance Health, I see a disconnect between market cap and long-term earnings potential. Health sector valuations have dropped sharply, but lower multiples reflect uncertainty, not necessarily increased risk for robust companies like ELV. Elevance Health stands out for its ability to manage industry uncertainties and is well-positioned for a valuation re-rating as confidence returns.