Opinion: It's Time to Load Up on UnitedHealth Group Stock

It's fair to say that 2025 was a year that UnitedHealth Group (NYSE: UNH) would probably like to forget. It was a true "when it rains, it pours" situation, ranging from suspending its forecast for the year to dealing with the Department of Justice to leadership shakeups.

UnitedHealth's stock finished 2025 down 33%, but this year has gotten off to a much better start for the healthcare giant. Its stock is up a modest 3.9% year to date through April 27, and its recent earnings results showed enough glimpses of hope to warrant a revisit from investors.

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UnitedHealth is making progress in three key areas

I wrote an article back in January that outlined three things I was paying attention to regarding UnitedHealth's business:

1. An estimated earnings per share (EPS) of $17.25 this year.
2. A lower medical care ratio (MCR).
3. Improved operating margins (profit from core operations).

There is still work to be done, but it's making noticeable progress.

Earnings per share

In the first quarter, its EPS and adjusted EPS (which removes one-off events) were $6.90 and $7.23, respectively. The good performance caused UnitedHealth to raise its EPS guidance for the year to $17.35 and $18.25, respectively. Both of these are higher than the EPS I was looking for, which checks off the first box.

Medical care ratio

UnitedHealth's MCR is the percentage of money it collects from premiums that it pays out for medical claims (doctor visits, hospital stays, etc.). For example, if it collected $500 million in premiums and paid out $450 million in claims, its MCR would be 90%.

Last year, its MCR was routinely close to 90%, which isn't ideal. In Q1, its MCR was 83.9%, down from 84.8% Q1 in 2025. This decline might look minimal on paper, but in practice, it could mean billions saved. UnitedHealth says the declining MCR is due to pricing discipline, better cost management, and favorable conditions, but it could increase in the second half of the year.

Operating margins

In Q1, UnitedHealth's operating margins were 6.6%, up from 6.2% in Q1 2025. It managed to improve margins even though its operating earnings were down about 1% from last year ($9 billion versus $9.1 billion). This is a sign the company is beginning to operate more efficiently.

UnitedHealth has scale working in its favor

UnitedHealth is a fully integrated company, meaning it operates on both the care and insurance sides of the healthcare industry. It's the country's largest health insurer, physician employer, and Medicare Advantage provider -- even after serving 965 million fewer members than last year.

Although the term is usually reserved for banks, UnitedHealth has reached "too big to fail" status because of its deep integration into the U.S. healthcare and financial systems. Its subsidiary, Change Health, processes one in three U.S. patient records. UnitedHealthcare served 49.1 million people last quarter, and its pharmacy branch, Optum RX, fills well over a billion prescriptions annually (383 million last quarter).

At that scale, UnitedHealth is too important to the U.S. healthcare infrastructure. Its $111.7 billion in revenue in Q1 is more than the GDP of 141 countries.

Much more upside than downside

Being "too big to fail" alone doesn't make UnitedHealth a good investment (it has been that way for a while, yet its stock is down over the past five years). However, after resetting from a tough 2025, and now showing glimpses of recovery, its stock has much more upside than downside.

You're getting a blue-chip stock that's currently trading at only 19 times its projected earnings over the next 12 months. In the early part of last year, it was trading in the 30s. One can't predict how a stock will perform going forward, but the 2.5% dividend yield should help buy UnitedHealth some more patience from investors.

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