Here's Why UnitedHealth Group (UNH) Sold Off Sharply in Q2

RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its “RiverPark Large Growth Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. U.S. equity markets surged in the second quarter, with the S&P 500 Total Return Index rising 10.94% and the Russell 1000 Growth Index returning 17.84%. The fund also surged in the quarter and returned 15.01%. Continued enthusiasm for artificial intelligence, better-than-expected earnings in several large-cap growth sectors, and improving macroeconomic conditions lifted the markets in the quarter. Growth-focused stocks took the lead once more, with the strongest performance coming from sectors like technology, communication services, and certain areas of consumer discretionary. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, RiverPark Large Growth Fund highlighted stocks such as UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The one-month return of UnitedHealth Group Incorporated (NYSE:UNH) was -21.68%, and its shares lost 57.60% of their value over the last 52 weeks. On August 4, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $240.98 per share, with a market capitalization of $218.603 billion.

RiverPark Large Growth Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2025 investor letter:

"UnitedHealth Group Incorporated (NYSE:UNH): UNH was the portfolio’s weakest performer in Q2. The company’s Q1 results, reported in April, showed 5% revenue growth but declining earnings as medical cost ratios rose to 84.8%. Higher-than-expected utilization in outpatient procedures, particularly among Medicare Advantage and Medicaid patients, pressured margins. The company subsequently lowered full-year guidance during its June investor update.

The stock sold off sharply in response to concerns that elevated utilization trends could persist through year-end. Margin compression, combined with regulatory uncertainty around Medicare Advantage rate-setting, weighed heavily on investor sentiment. Sell-side analysts revised estimates downward, highlighting near-term earnings risk.

Despite the short-term volatility, we continue to view UnitedHealth as one of the strongest franchises in healthcare. The company’s integrated model, combining insurance, pharmacy benefits, and care delivery, positions it well for long-term value creation. We expect utilization to normalize over the next 12-18 months and believe UNH’s earnings power remains intact over a multi-year horizon."

UnitedHealth Group Incorporated (NYSE:UNH) is in 18th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 139 hedge fund portfolios held UnitedHealth Group Incorporated (NYSE:UNH) at the end of the first quarter, which was 150 in the previous quarter. While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered UnitedHealth Group Incorporated (NYSE:UNH) and shared the list of best dividend stocks to buy and hold forever. Baron Health Care Fund chose to exit UnitedHealth Group Incorporated (NYSE:UNH) during Q2 2025. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.