Not Just Medicare, UnitedHealth's Optum Rx Gets Its Own DOJ Checkup

The U.S. Department of Justice’s criminal probe into UnitedHealth Group Incorporated UNH is broader than previously reported, per Bloomberg. While investigators had already been looking at its Medicare Advantage billing practices, they are also examining Optum Rx, the company’s pharmacy benefit manager (PBM), and how UnitedHealth pays physicians. These additional lines of inquiry show that the scrutiny extends well beyond what was initially understood.

UnitedHealth has not been accused of any wrongdoing yet and says it is cooperating with both civil and criminal requests while standing by its practices. Even so, the widening investigation has unsettled investors.

The review of physician payments suggests concern about broader reimbursement practices. Overall, the current administration has already targeted PBMs in its broader effort to reduce prescription drug costs. Together, the new details signal heightened legal and regulatory risk for the nation’s largest health insurer.

Optum Rx, one of the nation’s largest PBMs, delivered $5.8 billion in adjusted operating income in 2024 and $2.8 billion in the first half of 2025. The broader Optum division gives UnitedHealth valuable diversification at a time when escalating medical costs are pressuring its core insurance business. Any regulatory hit to Optum could therefore carry outsized consequences for the company. UnitedHealth’s medical care ratio — a key measure of costs as a percentage of premiums — has already climbed from 83.2% in 2023 to 85.5% in 2024, and further to 87.1% in the first half of 2025.

Peers Suffering From Rising Medical Costs Trend Too

UnitedHealth’s peers, including Centene Corporation CNC and Elevance Health, Inc. ELV, are also grappling with rising medical costs, which have already pushed them to trim their 2025 guidance.

Centene lowered its adjusted EPS outlook to $1.75 for 2025, significantly down from the previous estimate of $7.25. It now projects its HBR to spike to 93.5% in the second half of the year compared with 89.4% last year. Similarly, Elevance reduced its adjusted EPS forecast to $30, below the prior $34.15–$34.85 range. ELV’s benefit expense ratio is set to reach 90% in 2025, up from 88.5% witnessed in 2024.

UnitedHealth’s Price Performance, Valuation and Estimates

Shares of UNH have lost 40.6% in the year-to-date period compared with the industry’s decline of 31.4%.

From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 17.61, still up from the industry average of 14.83. UNH carries a Value Score of B.

The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $16.21 per share, implying a 41.4% drop 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research