Few stocks have been as resilient as UnitedHealth Group (UNH 1.36%). The company operates the largest health insurance business in the U.S. It runs the second biggest pharmacy benefits manager (PBM). And UnitedHealth Group has a fast-growing healthcare technology and services unit with Optum.
However, UnitedHealthGroup just hit a five-year low. Shares of the healthcare giant have plunged more than 50% below the peak set in late 2024. Here are five things investors need to know.
1. Pulling financial guidance
A few weeks ago, UnitedHealth Group was projecting full-year net earnings based on generally accepted accounting principles (GAAP) of between $24.65 and $25.15 per share with adjusted earnings of between $26 and $26.50 per share. The midpoint of the adjusted earnings range represented a modest year-over-year decline of around 5%.
UnitedHealth said the weaker outlook reflected "heightened care activity indications" in its Medicare Advantage business and "unanticipated changes in the profile of Optum Health members." At the time of its first-quarter update on April 27, 2025, the company's management thought these two factors would "be highly addressable over the course of this year."
It's a different story now. Last week, UnitedHealth Group announced that it was pulling its 2025 guidance. The company said in a press release that medical expenditures are "expected to be higher than anticipated," especially for "Medicare Advantage beneficiaries new to UnitedHealthcare." However, UnitedHealth Group projects a return to growth in 2026.
2. Musical chairs at the top
When a company has bad news, it's usually smart to get all of it out at once. UnitedHealth Group seemed to have done just that by announcing the suspended 2025 outlook at the same time as revealing the unexpected departure of CEO Andrew Witty for "personal reasons." Witty led the company for a little over four years after previously serving as president of UnitedHealth Group and CEO of Optum.
UnitedHealth Group didn't skip a beat in appointing someone to replace Witty. The company's board of directors selected Stephen J. Hemsley to be the new CEO effective immediately. Hemsley was UnitedHealth Group's CEO from 2006 to 2017 and will continue to serve as chairman of the board.
3. DOJ investigation
But there was more bad news to come after UnitedHealth Group's simultaneous announcement of its guidance suspension and abrupt CEO change. One day later, The Wall Street Journal reported that the U.S. Department of Justice was investigating the company for potential Medicare fraud. The newspaper had disclosed in February 2025 that the DOJ was investigating UnitedHealth's Medicare billing practices.
However, UnitedHealth Group responded quickly to the latest news about a DOJ investigation. The company issued a statement that said:
We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today. The WSJ's reporting is deeply irresponsible, as even it admits that the "exact nature of the potential criminal allegations is unclear." We stand by the integrity of our Medicare Advantage program.
Image source: Getty Images.
4. PBM pressure
In addition to those challenges, UnitedHealth Group's Optum Rx PBM business is under tremendous pressure. President Trump stated at a press conference last week that he plans to get rid of PBMs. The president said, "We're going to cut out the middleman and facilitate the direct sale of drugs at the most favored national price directly to the American citizen."
This shouldn't have surprised anyone. Health and Human Services Secretary Robert F. Kennedy Jr. said during his Senate confirmation hearing earlier this year that President Trump "is absolutely committed to fixing the PBMs." Kennedy added, "Trump wants to get the excess profits away from the PBMs and send it back to primary care, to patients in this country."
In the first quarter of 2025, Optum Rx generated over $13.9 billion in revenue -- nearly 13% of UnitedHealth Group's total revenue. The PBM unit contributed $1.3 billion in earnings before income taxes, reflecting 16% of the company's total.
5. Wall Street remains bullish
Should investors run for the hills? Most analysts don't think so. Wall Street remains overwhelmingly bullish about UnitedHealth Group stock.
Of the 27 analysts surveyed by LSEG in May, 22 rate UnitedHealth Group as a "buy" or a "strong buy." Another four analysts recommend holding the stock, with only one giving a "sell" rating. Notably, four top analysts reiterated buy recommendations after all of last week's bad news. The average 12-month price target reflects an upside potential of roughly 47%.
I'm not concerned about the musical chairs at the top: Hemsley should provide a firm and experienced hand at the helm. It's too soon to fret about a potential DOJ investigation. My main worry is what might happen with Optum Rx with PBMs in the bullseye of the Trump administration.
However, all the negatives are fully baked into UnitedHealth's share price in my view, with its stock now trading at 11.5 times forward earnings. Now could be an opportune time for aggressive investors to buy this beaten-down stock.
