Shares of UnitedHealth Group (UNH 2.88%) have been falling rapidly after the company reported its latest earnings numbers. This is even after an already tough year in 2025, when the health insurance giant lost 35% of its value.
The market has been especially bearish on the stock due to concerns about lower-than-expected increases in Medicare Advantage rates. Is this an overreaction, and has UnitedHealth Group stock become an incredibly cheap buy, or is it in danger of going even lower?
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How vulnerable is UnitedHealth to the proposed Medicare changes?
In 2025, UnitedHealth's full-year revenue totaled $447.6 billion, up 12% from the previous year. The fastest-growing area of its business was its Medicare & retirement segment, which rose by approximately 23%, to $171.3 billion in revenue, accounting for a little over 38% of the company's top line. And the segment has risen by 89% since 2020, back when its revenue totaled $90.8 billion.
Medicare has undeniably played a big role in UnitedHealth's growth in recent years. The Trump administration's proposal to keep Medicare Advantage rates flat in 2027 would have a material impact on the healthcare company's business, and investors are justified in being concerned about the stock.
NYSE: UNH
Key Data Points
Is more of a sell-off coming for UnitedHealth's stock?
UnitedHealth is already bracing for a tough year in 2026, with its guidance calling for its top line to come in around $439 billion, which translates to a decline of 2%. It's a significant development for a business that has had no trouble growing in recent years. And now, on top of it all, there's also the looming problem of Medicare Advantage rates being flat for 2027.
If UnitedHealth effectively becomes primarily a dividend stock that investors buy simply for its yield (currently at 3.2%), as opposed to its growth prospects, then its valuation may reflect that and trade at a lower earnings multiple. As a result, there could indeed be more of a decline to come for UnitedHealth. Not only could its earnings worsen due to persistently high medical costs and limited revenue growth, but its earnings multiple may also remain modest. Although the stock may seem cheap, trading at a price-to-earnings multiple of just 14, if UnitedHealth isn't expected to generate any positive growth in the near future, then it may not be easy to justify paying more for the stock.
Given the uncertainty around Medicare Advantage rates and the healthcare sector as a whole, a wait-and-see approach with UnitedHealth stock may be most appropriate right now.
