UnitedHealth Group: A Bumpy Ride Ahead
The upcoming year seems to hold promise for the beleaguered healthcare giant.
Calling UnitedHealth Group, the largest health insurance company and fourth-largest healthcare company by market capitalization, an underdog might not be entirely accurate. Yet, as we look towards 2025, it certainly feels a bit like it.
Since the start of the year, the company’s stock price has plummeted by over 30%, even dipping as much as 53% at one point. So, should investors shy away from this struggling stock? I wouldn’t say so. I actually believe that UnitedHealth Group’s stock is bound for a significant rebound by 2026.
A Year to Forget
Honestly, for many shareholders, 2025 may be a year best left in the past. Health insurance stocks seemed to embody Murphy’s Law—everything that could go wrong, did go wrong.
In April, UnitedHealth lowered its full-year profit forecast. The company pointed to two key factors: higher-than-anticipated utilization of Medicare Advantage plans and unexpected changes affecting reimbursement plans for Optum Health members.
A month later, matters worsened. UnitedHealth decided to halt its 2025 outlook entirely due to soaring medical costs. Adding to the turmoil, CEO Andrew Whitty abruptly left the company citing “personal reasons.”
As if that weren’t enough, a report indicated that the U.S. Department of Justice is conducting a criminal investigation into UnitedHealth. While the Department hadn’t contacted the company at the time, the report was later confirmed to be true.
Bright Days Await
Despite the negative news, you might wonder why I believe UnitedHealth Group’s stock will soar in 2026. In my view, the difficulties facing the company are temporary.
When medical costs exceed expectations, the typical response for a health insurance company is to raise premiums—which is exactly what UnitedHealth plans to do. Stephen Hemsley, who previously served as CEO and returned to management after Whitty’s exit, mentioned in the last earnings call that pricing strategies are on track to enhance operating profit growth in 2026.
Of course, addressing the challenges within Optum won’t happen overnight. Hemsley admitted during the earnings call that improvement in this area will take time, stating the company will see progress in 2026 but not immediate results.
Still, I expect UnitedHealth to report solid revenue growth next year. Typically, as profits rise, stock prices follow suit. Investors are also optimistic, anticipating that revenue growth will continue to pick up from 2027 onwards. I think that’s a reasonable expectation. Importantly, a company’s stock can begin to rise even before it achieves high growth, just based on anticipation.
But what about the Department of Justice investigation? I doubt it will be wrapped up by the end of next year. These matters often take time. UnitedHealth previously endured a civil investigation by the Justice Department that lasted a decade. However, at least in that case, the findings ultimately cited no wrongdoing on the company’s part. Even if the current investigation doesn’t yield a positive outcome, UnitedHealth may navigate it relatively unscathed.
Why Predictions Might Go Awry
Predicting future outcomes is risky. It’s entirely possible my forecast for a spike in UnitedHealth Group’s stock could be off base.
If the stock price doesn’t gain momentum, there are valid reasons for concern. I’m confident that UnitedHealth will achieve revenue growth in 2026, but if the broader market continues to rise, that growth might not be enough to attract investor interest. In a thriving market, compared to other high-growth stocks, UnitedHealth may not seem appealing.
On the flip side, a downturn in the market could benefit UnitedHealth. Investors might appreciate the company’s stability and its anticipated increases in earnings. Regardless of the circumstances, one thing seems certain: no one will view UnitedHealth Group as an underdog in 2026.
