UnitedHealth Group Faces Earnings Decline Amid Rising Costs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 16 2026
0mins
Should l Buy UNH?
Source: Fool
UnitedHealth Group's stock has fallen 3.01% and hit a 20-day low, reflecting ongoing concerns about its financial performance.
The company's operational earnings plummeted by 41% last year to just under $19 billion, despite a 12% revenue increase to $447.6 billion. This significant decline, driven by rising medical costs and restructuring expenses, has raised doubts about the sustainability of its dividend payments, although the company still expects to cover its capital expenditures and share repurchases. The stock's performance has been further impacted by a proposed 0.09% increase in Medicare payments for 2027, which has led to diminished investor confidence.
As UnitedHealth navigates these challenges, investors are advised to approach the stock cautiously, given the bleak outlook for revenue growth and the potential impact of rising costs on future earnings.
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Analyst Views on UNH
Wall Street analysts forecast UNH stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for UNH is 397.82 USD with a low forecast of 330.00 USD and a high forecast of 444.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
19 Analyst Rating
16 Buy
3 Hold
0 Sell
Strong Buy
Current: 276.650
Low
330.00
Averages
397.82
High
444.00
Current: 276.650
Low
330.00
Averages
397.82
High
444.00
About UNH
UnitedHealth Group Incorporated is a healthcare and well-being company. Its segments include Optum Health, Optum Insight, Optum Rx, and UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State. Optum Health offers comprehensive and patient-centered care, addressing the physical, mental, social, and financial well-being. Optum Health delivers primary, specialty and surgical care; helps patients and providers navigate and address complex, chronic and behavioral health needs. Optum Insight connects the healthcare system with services, analytics and platforms that make clinical, administrative and financial processes simpler and more efficient for all participants in the healthcare system. Optum Rx offers a range of pharmacy care services through retail pharmacies, through home delivery, specialty and community health pharmacies and the provision of in-home and community-based infusion services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
UnitedHealth Group Shares Continue to Decline
- Disappointing Earnings: UnitedHealth Group reported a total revenue of $447.6 billion for 2025, a 12% increase year-over-year, yet the stock continues to decline due to lower-than-expected Medicare Advantage rate increases, reflecting market concerns about future growth.
- Medicare Segment Growth: The Medicare & retirement segment saw a revenue increase of approximately 23%, reaching $171.3 billion and accounting for 38% of total revenue, with an impressive 89% growth since 2020, but future policy changes may hinder ongoing expansion.
- Pessimistic Future Outlook: UnitedHealth anticipates a revenue decline to $439 billion in 2026, a 2% drop, marking a significant shift for a company that has experienced consistent growth in recent years, potentially further eroding investor confidence.
- Dividend Appeal Diminishing: Although the current dividend yield stands at 3.2%, if UnitedHealth's growth prospects remain bleak, it may trade at a lower earnings multiple, increasing the risk of further stock price declines.
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Buffett's Investment Strategy and Market Dynamics
- Buffett's Leadership Achievements: Buffett served as CEO of Berkshire Hathaway from 1965, achieving an average annual stock price increase of about 20%, significantly outperforming the S&P 500's 10.3%, highlighting the success and sustainability of his investment strategies.
- Signs of DaVita's Recovery: DaVita exceeded expectations in its latest quarterly results and provided 2026 earnings guidance between $13.60 and $15, with shares surging over 30% since the earnings release, indicating restored market confidence and future growth potential.
- Investment Opportunity in Kraft Heinz: Despite Berkshire's losses in Kraft Heinz, the current market cap of around $7.5 billion and a forward P/E of 9 attract new investors, especially as the company plans to split to unlock value, reminiscent of Kellogg's successful separation strategy.
- Cautious Stance on UnitedHealth Group: Although Berkshire purchased 5 million shares last year, the stock has fallen from $350 to around $280 due to lower-than-expected Medicare payment increases, prompting investors to think twice before buying the dip given the potential for further multiple compression.
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DaVita's Earnings Beat Expectations, Signs of Recovery Ahead
- Strong Earnings Performance: DaVita's latest quarterly results exceeded expectations, with projected earnings per share between $13.60 and $15 for 2026, resulting in a current price-to-earnings ratio of only 9 times, indicating potential for future growth and attracting investor interest.
- Stock Price Rebound: Since the earnings release, DaVita's stock has surged over 30%, reflecting market recognition of its performance and potentially providing room for multiple expansion, as it previously traded at 13 to 14 times forward earnings.
- Buffett's Investment Strategy: Despite Berkshire Hathaway's losses on its Kraft Heinz investment, currently valued at around $7.5 billion, the planned split into two entities may present opportunities for new investors, especially as Kraft Heinz trades at a mere 9 times forward earnings, below peers.
- Healthcare Sector Challenges: UnitedHealth Group's stock has fallen from $350 to around $280, primarily due to the U.S. government's lower-than-expected Medicare payment increases; although Buffett had previously purchased shares, the current 16 times forward earnings ratio indicates market concerns about its growth trajectory, warranting caution for investors.
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Overview of Medicare Changes for Retirees in 2026
- Drug Cost Reduction: Thanks to the Inflation Reduction Act, retirees will see significant reductions in prescription drug costs starting in 2026, with price negotiations for the first ten drugs taking effect on January 1, 2026, alleviating financial burdens and improving overall financial health for retirees.
- Rising Medicare Costs: The standard Medicare Part B premium will increase from $185 to $202.90 in 2026, while the annual deductible will rise by $26 to $283, negatively impacting retirees' disposable income, especially as Social Security cost-of-living adjustments may not keep pace with these increases.
- Impact on High-Income Retirees: High-income retirees will face a 9% increase in the income-related monthly adjustment amount (IRMAA) in 2026, with income thresholds rising by about 3%, meaning more retirees will encounter higher healthcare costs, further straining their financial resources.
- Medicare Advantage Market Turmoil: Major insurers like Humana and UnitedHealth have withdrawn Medicare Advantage offerings in hundreds of counties, leading to reduced services and limited networks, with CEOs warning that future payment increases may have a “profoundly negative impact” on seniors' benefits and access to care.
See More
Overview of Medicare Changes for Retirees in 2026
- Lower Drug Costs: Starting in 2026, the CMS can negotiate prices for the first time under the Inflation Reduction Act, potentially lowering costs for retirees on 10 key prescription drugs, particularly those for diabetes and heart conditions, thereby alleviating some financial burdens on retirees.
- Rising Premiums and Deductibles: The standard Medicare Part B premium has increased from $185 to $202.90 in 2026, with the annual deductible rising by $26 to $283, leading 54% of Social Security recipients to feel that the 2.8% COLA is insufficient to offset these increases, which may heighten financial stress for retirees.
- Impact on High-Income Retirees: High-income retirees will face a 9% increase in the income-related monthly adjustment amount (IRMAA) in 2026, with income thresholds rising by about 3%, further straining their healthcare budgets and reducing disposable income.
- Medicare Advantage Chaos: Major insurers like Humana and UnitedHealth have withdrawn Medicare Advantage offerings in hundreds of counties, reducing benefits for additional services; CEOs warn that the proposed 0.9% payment increase for 2027 could have a profoundly negative impact on seniors' benefits and access to care.
See More
CVS Health Earnings Outlook Analysis
- Earnings Release Date: CVS Health is set to report its latest earnings pre-market on February 10, and while market focus on its 2026 guidance may impact stock price, the company has consistently exceeded earnings expectations over the past four quarters, indicating resilience in profitability.
- Medicare Payment Impact: Following the latest Medicare Advantage payment news, CVS shares have fallen over 14%, which could negatively affect investor sentiment post-earnings, particularly regarding updates to the 2026 guidance.
- Earnings Expectation Shift: Analysts forecast CVS's non-GAAP earnings for Q4 2025 at $0.99 per share, a decline from $1.19 in Q4 2024; however, expectations for a potential earnings beat remain, which could lead to a stock rebound.
- Long-Term Growth Potential: Despite pressures from Medicare payment rates, CVS's retail pharmacy and pharmacy benefits management units generate a larger share of revenue, maintaining a positive long-term growth outlook, especially when compared to UnitedHealth's valuation, which presents a more attractive investment opportunity.
See More
UnitedHealth Group Shares Continue to Decline
- Disappointing Earnings: UnitedHealth Group reported a total revenue of $447.6 billion for 2025, a 12% increase year-over-year, yet the stock continues to decline due to lower-than-expected Medicare Advantage rate increases, reflecting market concerns about future growth.
- Medicare Segment Growth: The Medicare & retirement segment saw a revenue increase of approximately 23%, reaching $171.3 billion and accounting for 38% of total revenue, with an impressive 89% growth since 2020, but future policy changes may hinder ongoing expansion.
- Pessimistic Future Outlook: UnitedHealth anticipates a revenue decline to $439 billion in 2026, a 2% drop, marking a significant shift for a company that has experienced consistent growth in recent years, potentially further eroding investor confidence.
- Dividend Appeal Diminishing: Although the current dividend yield stands at 3.2%, if UnitedHealth's growth prospects remain bleak, it may trade at a lower earnings multiple, increasing the risk of further stock price declines.
See More
Buffett's Investment Strategy and Market Dynamics
- Buffett's Leadership Achievements: Buffett served as CEO of Berkshire Hathaway from 1965, achieving an average annual stock price increase of about 20%, significantly outperforming the S&P 500's 10.3%, highlighting the success and sustainability of his investment strategies.
- Signs of DaVita's Recovery: DaVita exceeded expectations in its latest quarterly results and provided 2026 earnings guidance between $13.60 and $15, with shares surging over 30% since the earnings release, indicating restored market confidence and future growth potential.
- Investment Opportunity in Kraft Heinz: Despite Berkshire's losses in Kraft Heinz, the current market cap of around $7.5 billion and a forward P/E of 9 attract new investors, especially as the company plans to split to unlock value, reminiscent of Kellogg's successful separation strategy.
- Cautious Stance on UnitedHealth Group: Although Berkshire purchased 5 million shares last year, the stock has fallen from $350 to around $280 due to lower-than-expected Medicare payment increases, prompting investors to think twice before buying the dip given the potential for further multiple compression.
See More
DaVita's Earnings Beat Expectations, Signs of Recovery Ahead
- Strong Earnings Performance: DaVita's latest quarterly results exceeded expectations, with projected earnings per share between $13.60 and $15 for 2026, resulting in a current price-to-earnings ratio of only 9 times, indicating potential for future growth and attracting investor interest.
- Stock Price Rebound: Since the earnings release, DaVita's stock has surged over 30%, reflecting market recognition of its performance and potentially providing room for multiple expansion, as it previously traded at 13 to 14 times forward earnings.
- Buffett's Investment Strategy: Despite Berkshire Hathaway's losses on its Kraft Heinz investment, currently valued at around $7.5 billion, the planned split into two entities may present opportunities for new investors, especially as Kraft Heinz trades at a mere 9 times forward earnings, below peers.
- Healthcare Sector Challenges: UnitedHealth Group's stock has fallen from $350 to around $280, primarily due to the U.S. government's lower-than-expected Medicare payment increases; although Buffett had previously purchased shares, the current 16 times forward earnings ratio indicates market concerns about its growth trajectory, warranting caution for investors.
See More
Overview of Medicare Changes for Retirees in 2026
- Drug Cost Reduction: Thanks to the Inflation Reduction Act, retirees will see significant reductions in prescription drug costs starting in 2026, with price negotiations for the first ten drugs taking effect on January 1, 2026, alleviating financial burdens and improving overall financial health for retirees.
- Rising Medicare Costs: The standard Medicare Part B premium will increase from $185 to $202.90 in 2026, while the annual deductible will rise by $26 to $283, negatively impacting retirees' disposable income, especially as Social Security cost-of-living adjustments may not keep pace with these increases.
- Impact on High-Income Retirees: High-income retirees will face a 9% increase in the income-related monthly adjustment amount (IRMAA) in 2026, with income thresholds rising by about 3%, meaning more retirees will encounter higher healthcare costs, further straining their financial resources.
- Medicare Advantage Market Turmoil: Major insurers like Humana and UnitedHealth have withdrawn Medicare Advantage offerings in hundreds of counties, leading to reduced services and limited networks, with CEOs warning that future payment increases may have a “profoundly negative impact” on seniors' benefits and access to care.
See More
Overview of Medicare Changes for Retirees in 2026
- Lower Drug Costs: Starting in 2026, the CMS can negotiate prices for the first time under the Inflation Reduction Act, potentially lowering costs for retirees on 10 key prescription drugs, particularly those for diabetes and heart conditions, thereby alleviating some financial burdens on retirees.
- Rising Premiums and Deductibles: The standard Medicare Part B premium has increased from $185 to $202.90 in 2026, with the annual deductible rising by $26 to $283, leading 54% of Social Security recipients to feel that the 2.8% COLA is insufficient to offset these increases, which may heighten financial stress for retirees.
- Impact on High-Income Retirees: High-income retirees will face a 9% increase in the income-related monthly adjustment amount (IRMAA) in 2026, with income thresholds rising by about 3%, further straining their healthcare budgets and reducing disposable income.
- Medicare Advantage Chaos: Major insurers like Humana and UnitedHealth have withdrawn Medicare Advantage offerings in hundreds of counties, reducing benefits for additional services; CEOs warn that the proposed 0.9% payment increase for 2027 could have a profoundly negative impact on seniors' benefits and access to care.
See More
CVS Health Earnings Outlook Analysis
- Earnings Release Date: CVS Health is set to report its latest earnings pre-market on February 10, and while market focus on its 2026 guidance may impact stock price, the company has consistently exceeded earnings expectations over the past four quarters, indicating resilience in profitability.
- Medicare Payment Impact: Following the latest Medicare Advantage payment news, CVS shares have fallen over 14%, which could negatively affect investor sentiment post-earnings, particularly regarding updates to the 2026 guidance.
- Earnings Expectation Shift: Analysts forecast CVS's non-GAAP earnings for Q4 2025 at $0.99 per share, a decline from $1.19 in Q4 2024; however, expectations for a potential earnings beat remain, which could lead to a stock rebound.
- Long-Term Growth Potential: Despite pressures from Medicare payment rates, CVS's retail pharmacy and pharmacy benefits management units generate a larger share of revenue, maintaining a positive long-term growth outlook, especially when compared to UnitedHealth's valuation, which presents a more attractive investment opportunity.
See More
