What Happened?

A number of stocks fell in the afternoon session after industry bellwether UnitedHealth Group (UNH) slashed its 2025 profit forecast after reporting a significant surge in medical costs, sending shockwaves across the health insurance sector. The core of the issue stems from an “unprecedented medical cost trend environment,” particularly within the Medicare Advantage market, which are privately run versions of the federal health insurance program. UnitedHealth, the largest provider in this space, now expects these costs to rise by 7.5% in 2025, a significant jump from its earlier 5% projection, with the potential to accelerate to almost 10% in 2026. In response, the insurer announced it will drop plans covering over 600,000 people. The company's lowered earnings forecast has raised investor concerns that these surging costs and utilization rates are an industry-wide problem, impacting the profitability of other carriers as well.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Research Tools & Consumables company Bruker (NASDAQ: BRKR) fell 3.2%. Is now the time to buy Bruker? Access our full analysis report here, it’s free.
• Outpatient & Specialty Care company agilon health (NYSE: AGL) fell 3%. Is now the time to buy agilon health? Access our full analysis report here, it’s free.
• Senior Health, Home Health & Hospice company AdaptHealth (NASDAQ: AHCO) fell 3.3%. Is now the time to buy AdaptHealth? Access our full analysis report here, it’s free.

Zooming In On AdaptHealth (AHCO)

AdaptHealth’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock gained 28% on the news that the company reported strong fourth-quarter 2024 results with revenue surpassing forecasts and driving EPS well above Wall Street estimates. While full-year revenue guidance came in slightly below expectations, full-year EBITDA guidance exceeded projections. Overall, this quarter had some key positives.

AdaptHealth is down 3.6% since the beginning of the year, and at $9.35 per share, it is trading 18.6% below its 52-week high of $11.49 from September 2024. Investors who bought $1,000 worth of AdaptHealth’s shares 5 years ago would now be looking at an investment worth $491.59.

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