UnitedHealth (UNH): Stock Crash, Recovery and Buffett's Exit

Which two segments make up this giant of the US health insurance and healthcare services field?

UnitedHealth Group (NYSE: UNH) is the largest health insurance and healthcare services company in the United States, with significant influence in the global healthcare ecosystem. Its business is composed of two major segments: UnitedHealthcare, the largest health insurance provider in the US, and Optum, the growth engine.

UnitedHealthcare covers Medicare, Medicaid, employer group plans and individual commercial insurance, with a vast number of policyholders, and is the business accounting for the highest proportion of the group's revenue. This segment has strong demand rigidity and high stability, constituting a typical cash-flow base. Optum, in turn, is composed of Optum Health, Optum Rx and Optum Insight, with a business spanning healthcare services, pharmacy benefit management (PBM), healthcare data analytics and technology services. Over the past several years, Optum's growth rate has significantly exceeded that of traditional insurance, and it is the group's true long-term growth core. This dual-engine structure of "stable cash flow layered with technological growth" is the fundamental reason UNH has maintained a steady performance over the long term.

From a profit-warning plunge to recovery: a price trajectory spanning two years

2025 was an extremely volatile year for UnitedHealth: it first experienced a plunge triggered by a profit warning, then entered a prolonged bottoming phase, before undergoing a marked recovery from the end of 2025 into 2026. To understand this trajectory, one needs to place it against the backdrop of soaring healthcare costs, policy pressure and violently swinging market sentiment. To facilitate a comparison of the driving factors of each phase, the table below sets out an overview.

The deep correction triggered by the profit warning

In the first half of 2025, the company disclosed that medical utilisation rates (particularly Medicare Advantage) had substantially exceeded expectations, causing adjusted earnings-per-share guidance to be markedly revised down and the medical loss ratio to soar; combined with the aftermath of the cyberattack on its healthcare technology subsidiary Change Healthcare, market panic spread, and institutions and retail investors reduced their positions in tandem. This round of correction brought the share price close to a 15-year low at one point. （Source: UnitedHealth Group official earnings disclosures）

The background that needs to be added is that this deep correction was also compounded by a major shock at the corporate governance level. The killing of UnitedHealthcare's chief executive Brian Thompson at the end of 2024 became one of the events that weighed on sentiment. The company subsequently launched a transformation plan, with Stephen Hemsley taking over as group chief executive to lead the ensuing margin recovery and operational adjustments.

Why the recovery was U-shaped rather than V-shaped

The share price did not stage a rapid V-shaped rebound, because the core pressure on the healthcare industry was not a one-off event, but comprised multiple structural factors: persistently high medical utilisation rates, insurance costs affected by policy and demographic structure, government regulation and the risk of a US Department of Justice (DOJ) investigation, and the systemic losses caused by the cyberattack. The market needed time to confirm whether earnings had truly returned to a stable upward track, and therefore a U-shaped trough structure formed. Overall, driven by earnings recovery and improved operational discipline, the company entered a process of rebuilding market confidence.

The signal of margin stabilisation presented in the Q1 2026 earnings

The results of the transformation began to show in the latest earnings. The following are the key verifiable financial data.

1. Full-year 2025 revenue was around US$447.57 billion, up about 12% year on year; full-year adjusted earnings per share were around US$16.35, but the fourth quarter, affected by a one-off loss-contract provision, saw single-quarter net profit of only around US$0.01, with the medical care ratio under pressure.

2. First-quarter 2026 revenue was around US$111.7 billion, up about 2% year on year; adjusted earnings per share were around US$7.23, beating market expectations. The medical care ratio fell to around 83.9%, an improvement of about 90 basis points from the same period last year, indicating that the cost side was stabilising.

3. The company raised its full-year 2026 adjusted earnings-per-share guidance to above US$18.25, and disclosed first-quarter operating cash flow of around US$8.9 billion, about 1.4 times net profit.

（Source: UnitedHealth Group, First Quarter 2026 Results, published: 21 April 2026）

It should be noted that one of the costs of margin stabilisation was proactive contraction. The company cut around one million members in areas such as Medicare Advantage to stabilise its profit margin, while the net margin recovered from its 2025 low to around 5.6% in the first quarter. This "trading scale for profit margin" adjustment is key to understanding the quality of its recovery.

The claim about Buffett buying in needs an important update

The "Buffett buys into UnitedHealth" that the market widely discussed earlier has now been rewritten by subsequent events, and investors need to grasp the full timeline to avoid making judgments based on outdated information.

The full process of building a position first, then clearing it

Berkshire Hathaway did indeed establish a new position of around 5 million shares of UNH in the second quarter of 2025; when disclosed in August 2025 the market value was around US$1.57 billion, with a purchase price of around US$271 per share, close to the then multi-year low. This move was interpreted by the market at the time as value bottom-fishing in an oversold leader.

However, the 13F filing disclosed on 15 May 2026, as at 31 March 2026, showed that Berkshire had cleared its entire UNH holding, with an exit price of around US$394 per share, achieving a return of around 45% within nine months. This was the first 13F issued by Berkshire under Greg Abel (who succeeded Warren Buffett as Berkshire's chief executive), and the same filing also cleared multiple positions including Amazon and Kraft Heinz, and reduced its stake in Bank of America. The market generally regarded this as an overall rotation at the portfolio level, rather than a standalone rejection of UNH's fundamentals, with most views considering it profit-taking or risk reduction. （Source: Berkshire Hathaway 13F filing, disclosed: 15 May 2026）

How to understand the signalling significance of this trade

Warren Buffett (Berkshire Hathaway's long-time helmsman and a representative figure of value investing) and his successor Abel differ in decision-making style. Some analysts point out that positions such as UNH and Amazon are more likely to have been the choice of the investment-manager team than of Buffett himself. As for the signalling significance, Berkshire's entry had been seen as confidence in an oversold leader, while its rapid exit was interpreted as follows: when the rate of expansion of downside risk is faster than the upside potential, even a business with a sound foundation may become a target for reduction. In other words, this trade reflects portfolio-management logic more than it constitutes a verdict on the company's long-term competitiveness.

At which levels is UnitedHealth's repeatedly discussed moat reflected?

Regardless of how the institutions holding the stock change, the market's discussion of UNH's long-term competitiveness usually focuses on its scale-based moat that is difficult to replicate. This moat is reflected at several levels.

• Demand rigidity and demographic structure: The US population continues to age, the number of Medicare and Medicaid policyholders grows year by year, healthcare spending as a proportion of US gross domestic product (GDP) remains at a relatively high level over the long term, and healthcare demand does not fluctuate significantly with the economic cycle.

• Optum's ecosystem-integration capability: Optum integrates healthcare technology, a data platform, pharmacy benefit management and a physician network, has maintained relatively high growth over the long term, and has relatively strong pricing power in the healthcare technology field, with a growth ceiling higher than that of the traditional insurance business.

• Scale and data barriers: The company's health-insurance market share is among the top in the country, its healthcare service network is broadly covered, its healthcare information platform is difficult to replicate, and strict regulation, while raising the industry threshold, also constitutes a barrier to new entrants.

A real industry event related to the article's theme and its impact

UnitedHealth's dramatic volatility in 2025 to 2026 is itself an event of industry-landmark significance.

1. Cause: The killing of UnitedHealthcare's chief executive at the end of 2024, combined with a rare quarterly earnings miss in early 2025 and a higher-than-expected rise in Medicare Advantage medical utilisation rates, jointly triggered a fall of more than 50% in the share price in the first half of 2025.

2. Development: Berkshire built a position at the low in the second quarter of 2025, and market sentiment warmed for a time; the company subsequently launched a transformation, repairing its profit margin by contracting membership, adjusting pricing and investing in AI (planning to invest around US$1.5 billion in 2026), and its first-quarter 2026 earnings beat expectations and its guidance was raised. But at the end of the first quarter of 2026 Berkshire cleared its holding, introducing a new variable to the recovery narrative. （Source: official disclosures from UnitedHealth Group and Berkshire Hathaway）

3. Impact on the industry: This event highlighted the fragility of the health insurance industry amid the interweaving of healthcare costs, regulatory investigations and policy uncertainty, and also reminded investors that even an industry leader may see its valuation and sentiment fluctuate substantially under structural pressure. The DOJ's investigation into Medicare-related issues has not yet concluded, constituting a continuing element of uncertainty.

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