UnitedHealth stock has plunged over 40% in 2025 and is approaching a key buy zone ahead of the Q2 2025 earnings.
UnitedHealth Group Inc. (UNH) has dropped over 40% in 2025, marking its steepest correction in decades. The sell-off followed a surprise earnings miss, rising healthcare costs, and a federal investigation. Despite these setbacks, UnitedHealth remains a fundamentally strong company. The stock is now approaching a key support level, offering a compelling valuation. This article explains the fundamental and technical drivers and discusses why now is the time to buy the dip in UnitedHealth.
UnitedHealth has experienced a sharp decline in 2025. The stock is down over 40% year-to-date, with the majority of the decline occurring in the past three months. This dramatic sell-off was initiated after the company slashed its earnings guidance and reported a surprise Q1 2025 miss in nearly two decades. The drop in stock reflects a mix of internal setbacks and external pressures.
A major factor is the US Department of Justice investigation into allegations of overbilling. This legal uncertainty has shaken investor confidence. Meanwhile, higher-than-expected medical costs and claims have compelled the company to revise its earnings forecasts downward.
The situation worsened in May when CEO Andrew Witty resigned abruptly, adding leadership instability to the mix. Investor sentiment took another hit as multiple institutional firms, including Ayrshire Capital Management and Ferguson Wellman Capital Management, sold large portions of their holdings in UnitedHealth.
Investors are also worried about a major data breach linked to UnitedHealth’s subsidiary, Change Healthcare. It was the largest healthcare data breach in US history. At the same time, UnitedHealth has lowered its earnings forecasts.
The chart below shows that UnitedHealth Group reported revenue of $109.58 billion in Q1 2025, reflecting a year-over-year increase of $9.8 billion. Moreover, the net income for the quarter reached $6.292 billion.
The operating earnings totalled $9.12 billion. These headline figures indicate strong growth and continued demand across the company’s core services.
However, the company revised its full-year outlook, projecting net earnings of $24.65–$25.15 per share and adjusted EPS of $26–$26.50. This revision followed unexpectedly high care activity in Medicare Advantage and a shift in Optum Health’s member profile, resulting in increased costs. Despite these pressures, the company returned nearly $5 billion to shareholders through dividends and buybacks.
Operationally, UnitedHealth improved its cost ratio to 12.4%, down from 14.1% in 2024. Return on equity rose to 26.8%, supported by strong capital efficiency and earnings. Membership growth remained healthy in self-funded plans, community care, and senior health programs. However, the gross profit margin declined to 21.70%, indicating pressure on profitability despite revenue expansion.
The Q2 2025 earnings are set to release on July 29, 2025. This earnings report will be crucial for assessing UnitedHealth’s ability to manage rising healthcare costs and regulatory risks in a challenging environment. The company expects normalised EPS of $4.57 and GAAP EPS of $4.29.
UnitedHealth experienced the sharpest stock price drop in its history during Q2 2025, as shown in the quarterly chart below. The stock declined by over 40% in Q2 2025 and closed the quarter at $311.97. The Q3 2025 continued the bearish momentum from the previous quarter, with the stock trading lower in July.
However, the stock is approaching a long-term support level near the $250 area, which represents the 61.8% Fibonacci retracement of the move from the 2008 Global Financial Crisis low to the 2024 all-time high. This strong support zone suggests the possibility of a consolidation and a potential reversal to the upside.
If the price begins to recover, it may target the $400+ area in the medium term. The emergence of inverted head-and-shoulders pattern formed during the 2008 crisis, support a long-term bullish outlook for UnitedHealth.
The recent 40% correction is not unusual in highly volatile markets, especially after the stock surged from 2008 low of $14.51 to 2024 high of $630. Therefore, the current drop may present a long-term buying opportunity during this correction.
Since UnitedHealth stock exhibits strong long-term volatility, it is more effective to analyse the trend using a logarithmic scale chart. The quarterly chart below shows that UnitedHealth has maintained a strong bullish trend throughout the 21st century.
The stock formed a major bottom after the Asian Financial Crisis in 1998, at $3.70, and then surged to a high of $64.61 by 2005. The strategic transformation and strong financial execution drove this surge.
First, in 1998, UnitedHealth restructured into five focused units. These units comprise small to mid-size employers, national employers, Medicare, technology, and health services. This restructuring positioned the company to capitalise on emerging opportunities and laid the groundwork for sustained revenue growth.
Second, acquisitions fueled growth. Major deals, including Oxford Health in 2004 and PacifiCare in 2005, significantly increased UnitedHealth’s premium revenue. Third, the company effectively controlled medical costs, with favourable cost development across prior years helping to maintain margins during 2005. These strategic moves helped grow the market cap from $8.4 billion to $256 billion.
Following the 2005 peak, the price corrected lower and formed another bottom during the Global Financial Crisis in 2008, reaching a low of $14.51.
From there, the stock resumed its uptrend and eventually posted a record high above $630 in 2024. This surge after 2008 was fueled by strategic expansion and robust earnings performance. Its Optum division experienced explosive financial growth. Moreover, the acquisitions of Change Healthcare, LHC Group, and numerous tech and provider assets expanded Optum’s footprint in healthcare delivery and pharmacy benefits.
The lows of 1998 and 2008 established a clear ascending channel, which defines the long-term bullish structure for UnitedHealth stock.
The ongoing correction in 2025 is testing this ascending channel, with strong technical support between the $150 and $220 range. A decline into the $220–$250 area could mark a turning point and ignite the next growth cycle. From a long-term technical perspective, this zone presents a potential buying opportunity for investors seeking to capitalise on future upside.
To better understand key levels for investors, the monthly chart below presents the long-term key support levels. It shows a strong bullish trend in UnitedHealth over the past two decades. The chart highlights a major support zone near the $230 area. This zone is marked in orange and spans a $30 range around $230.
A sharp drop in UnitedHealth’s stock toward this support region could present a strong buying opportunity for long-term investors. The company is expected to release earnings this week, which may act as a near-term catalyst. If the price corrects into this zone, it may be seen as a technical accumulation level.
It is also important to note that the RSI is approaching the 30 level, which typically indicates oversold conditions. A reading below 30 would strengthen the case for a technical reversal.
The price and momentum indicators suggest that any decline toward the $250 support zone, accompanied by a low RSI, may provide a favourable long-term entry point for investors.
UnitedHealth’s current P/E ratio is 11.84, as shown in the chart below. This places it slightly above Elevance Health Inc. (ELV) but well below Humana Inc. (HUM). On the other hand, Centene Corporation (CNC) holds the lowest P/E among the group at 4.165. Historically, UnitedHealth traded at a premium to most of its peers, but its valuation has now compressed significantly.
The chart shows that UnitedHealth’s P/E surged in 2024, likely due to strong earnings momentum, before correcting sharply in 2025. Despite this decline, its valuation remains competitive within the managed care sector. Compared to Humana, UnitedHealth offers a lower multiple, suggesting a more attractive entry point given its scale and diversification. Its current valuation reflects a potential opportunity for long-term investors.
Regulatory risks remain a major concern. The Department of Justice is investigating UnitedHealth for overbilling. Any legal outcome could result in substantial fines, increased oversight, or additional compliance costs. These outcomes may reduce profitability and weaken investor confidence.
Healthcare costs are rising faster than expected. Increased care activity in Medicare Advantage, along with a shift in member demographics, has already put pressure on margins. If costs continue to escalate or pricing power weakens, UnitedHealth’s earnings could fall below guidance again.
Moreover, cybersecurity threats pose another critical risk. The massive data breach at Change Healthcare damaged the company’s reputation, and future breaches or IT failures could lead to lawsuits, regulatory penalties, and customer attrition. These threats add ongoing operational uncertainty for investors.
UnitedHealth stock has faced a historic correction in 2025. Regulatory pressure, rising costs, and cybersecurity issues triggered a sharp sell-off. However, the company remains fundamentally strong. It continues to generate billions in revenue and maintains solid return metrics. Technical indicators show the stock is approaching long-term support zones. These levels may offer attractive entry points for patient investors.
Moreover, the valuation has become more compelling after the recent decline. UnitedHealth now trades at a discount relative to peers despite its scale and diversified business. Despite the risks, the long-term growth story is intact. If the company stabilises its earnings and manages its legal exposure, the stock could rebound sharply. The recent challenges are also priced in, and the stock may look to find support at the defined levels. Investors may consider buying the stock at the $250 price zone and look for strong growth in the coming quarters.
Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.