Shares of UnitedHealth Group have experienced a significant downturn, dropping 16% this year and continuing the trend from 2025, when the stock lost 35% of its value. The recent declines follow the company’s latest earnings report, which fell short of investor expectations.
Market sentiments have turned increasingly negative, primarily due to concerns over anticipated changes to Medicare Advantage rates. Investors are questioning whether this sell-off is an overreaction or if UnitedHealth might face further declines in the future.
In 2025, UnitedHealth reported full-year revenue of $447.6 billion, marking a 12% increase from the prior year. The Medicare & retirement segment stood out as the fastest-growing area, experiencing a remarkable 23% growth to reach approximately $171.3 billion. This segment now accounts for over 38% of the company’s overall revenue and has surged by 89% since 2020, when it generated $90.8 billion.
Given the sector’s dependence on Medicare, the proposed decision by the Trump administration to maintain flat Medicare Advantage rates for 2027 poses a significant risk to UnitedHealth’s future earnings. Investors are understandably concerned about how this could affect the company’s performance.
Currently, the stock price is $276.70, up marginally by 0.02% during the day. UnitedHealth has a market capitalization of $251 billion, with a 52-week price range between $234.60 and $606.36. Despite dividend yields standing at a favorable 3.16%, the future outlook seems challenging.
For 2026, UnitedHealth has projected a decline in revenue to approximately $439 billion, indicating a 2% drop. This marks a concerning trend for a company traditionally known for its growth. If the market begins viewing UnitedHealth primarily as a dividend stock, focusing solely on its yield rather than its growth trajectory, the stock could see a further decline in its earnings multiple.
While the current price-to-earnings ratio is relatively low at 14, if growth remains stagnant and uncertainty around Medicare rates continues, justifying a higher valuation may become increasingly difficult. Given the unpredictability surrounding Medicare Advantage rates and the overall healthcare landscape, a cautious approach may be prudent for potential investors looking at UnitedHealth stock at this time.
