UnitedHealth's Commercial Unit: A Stabilizer Amid Healthcare Turmoil?

UnitedHealth Group Inc. UNH is currently navigating a challenging healthcare landscape, with its Medicare Advantage business reportedly facing regulatory scrutiny and rising care costs. However, amid all the hurdles, its commercial insurance business is stepping up as a vital source of stability.

As of March 31, 2025, the UnitedHealthcare business served 50.1 million people, representing a 1.9% year-over-year growth, driven by its self-funded commercial benefits. With more than 30 million members, the company’s commercial segment benefited from favorable pricing and a healthier risk pool compared to government plans. It showed consistent growth over time. Commercial plans are available to both individuals and employers, have less volatile cost structures and are less vulnerable to sudden changes in regulations than Medicare Advantage.

After the return of former CEO Stephen Hemsley in May 2025, the company is shifting its focus. As it works on tightening controls and compliance in its Medicare operations, UNH is also putting a strong emphasis on growing its commercial portfolio.

Even though UNH has pulled back on its full-year guidance due to ongoing pressures, the commercial division continues to provide a buffer against uncertainty. With the broader economy facing challenges that affect both consumers and providers, the company’s approach, particularly the strong performance of its commercial business, continues to anchor its financial stability.

How Are Competitors Faring?

Some of UNH’s major competitors in the healthcare plan provider space are Molina Healthcare, Inc. MOH and The Cigna Group CI.

Molina Healthcare recently warned about rising medical costs and erratic utilization trends, which led it to cut its 2025 earnings guidance. In contrast to its previous prediction of at least $24.50, Molina now projects adjusted earnings per share for the entire year to be between $21.50 and $22.50. Molina now projects adjusted earnings of about $5.50 per share for the second quarter of 2025.

By strategically selling its Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D, and CareAllies businesses to HCSC in March 2025, Cigna has differentiated itself. Its commercial-heavy model will provide clearer short-term visibility and more consistent underwriting performance. Cigna reported impressive results in the first quarter of 2025, driven by premium rate increases and strengthened relationships with existing clients.

UnitedHealth’s Price Performance, Valuation & Estimates

Shares of UNH have plunged 39.9% in the year-to-date period compared with the industry’s decline of 32.3%.

From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 12.85, above the industry average of 11.5. UNH carries a Value Score of B.

The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $21.85 per share, implying a 21% dip from the year-ago period.

The stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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