UnitedHealth Stock Plunges to 5-Year Lows on Reports of DoJ Criminal Probe

UnitedHealth Group (UNH) is currently navigating through an unprecedented crisis as its stock has plummeted over 55% in the past month, erasing five years of gains and reducing its market capitalization from $530 billion to approximately $280 billion. 

In today’s trading, UNH has collapsed by more than 16% to a new 5-year low in early action, with the 14-day Relative Strength Index (RSI) now at 11.18. This suggests that the healthcare stock is wildly oversold, although UNH has only fallen deeper and deeper into oversold territory over the past month.

Why is UNH Stock Down?

The healthcare giant's troubles began with the announcement of rising medical costs, particularly in its Medicare Advantage operations, which led to an increase in the Medical Benefits Ratio from 82% in 2022 to 85.5% in 2024. This financial pressure prompted the company to suspend its 2025 financial guidance, signaling significant uncertainty about its near-term performance.

Adding to the turmoil, CEO Andrew Witty unexpectedly resigned, leading to the return of former chief executive Stephen Hemsley, who will receive a $1 million annual base salary and a one-time $60 million equity award. 

Today’s sell-off was sparked by last night’s Wall Street Journal report that the Department of Justice's healthcare-fraud unit is conducting a criminal investigation into potential Medicare fraud within the company's Medicare Advantage operations, though UnitedHealth maintains it has not been officially notified of any such probe.

Is UNH Stock a Buy at Multi-Year Lows?

The company's immediate future hinges on several critical factors, including the resolution of the DOJ investigation, stabilization of medical costs, and Hemsley's ability to restore operational efficiency.  The situation is particularly significant given UnitedHealth's position as the nation's largest health insurer and its substantial influence on the Dow Jones Industrial Average ($DOWI).

Management projects a return to profitable growth by 2026, though several firms, including JPMorgan, have significantly reduced their price targets.

UNH stock is currently trading at historically low valuations, with a price-to-sales ratio of 0.62 compared to its five-year average of 1.29. However, that discount is due to the stock’s dramatic underperformance, and investors should note that the shares are pricing in considerable risk at current levels.

This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.