Why UnitedHealth Stock Is Soaring Today

Key Points

• A regulatory filing revealed UnitedHealth is on target to meet its Medicare Advantage enrollment targets.

• The insurer's bottom line is directly affected by the quality of plans enrollees choose.

• UnitedHealth still faces multiple DOJ probes and allegations of misconduct.

• 10 stocks we like better than UnitedHealth Group ›

Shares of UnitedHealth Group (NYSE: UNH) are rising on Tuesday, up 8.8% as of 2:23 p.m. ET. The jump comes as the S&P 500 and the Nasdaq Composite ticked up slightly.

The struggling healthcare giant's stock is spiking after it submitted a regulatory filing that suggests it is on track to hit targets for its premium plan enrollment, despite its recent troubles.

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UnitedHealth hits Medicare Advantage targets

The company's data shows 78% of its Medicare Advantage members will be enrolled in plans with quality ratings of at least four stars next year. That's the target laid out by former CEO Andrew Witty this summer that many investors feared UnitedHealth would fail to meet.

The company's revenue is directly tied to the star level of its enrollees: Better plans earn UnitedHealth more money. The figure isn't very impressive on its own -- it's in line with the average from past years -- but considering how much the insurer has been struggling to meet targets, it's a positive sign in the company's ongoing efforts to right the ship.

Image source: Getty Images.

UnitedHealth's troubles are far from over

Still, UnitedHealth continues to face mounting troubles. It lost its CEO this summer for "personal reasons," it is the subject of multiple ongoing DOJ probes into misconduct and fraud, and it has been accused of offering bonuses to nursing homes to incentivize denying seniors necessary hospital care.

Healthcare costs are ballooning and proving hard to predict. While a turnaround is very possible in the long term, this company's troubles seem far from over to me. I would stay away from UnitedHealth stock.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.