What Happened?
Shares of health insurance company UnitedHealth (NYSE: UNH) jumped 3% in the afternoon session after the stock extended its positive momentum as the company eased key investor concerns by reporting better-than-feared preliminary Medicare Advantage Star ratings and reaffirming its 2025 earnings outlook.
The company announced that approximately 78% of its Medicare Advantage members are expected to be in plans rated four stars or higher for 2026, a notable improvement from 69% in 2025 and consistent with historical performance. Furthermore, UnitedHealth confirmed it still expects to achieve at least $16 in earnings per share for fiscal year 2025, which includes its recent acquisition of Amedisys. This news provided significant relief to investors who were worried about potential guidance cuts and the negative impact of the star ratings on future earnings recovery. The positive development continues the momentum from the prior trading day, which saw the stock surge on the initial news.
After the initial pop the shares cooled down to $354.43, up 2.1% from previous close.
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What Is The Market Telling Us
UnitedHealth’s shares are very volatile and have had 20 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 previous big move we wrote about was 2 days ago when the stock gained 4.7% on the news that the company provided a positive update on its Medicare Advantage business and reaffirmed its full-year 2025 earnings guidance.
In a regulatory filing, the health insurance giant announced that based on a preliminary review, it expects approximately 78% of its Medicare Advantage members to be enrolled in plans rated four stars or higher. This rating is crucial because plans that achieve this threshold in the government's Star Rating system qualify for valuable bonus payments, which can directly boost the company's revenue. The news provides investors with increased confidence in a key segment of UnitedHealth's business. In addition to the promising Medicare outlook, the company also confirmed it would maintain its previously issued adjusted earnings per share forecast for 2025, signaling stability in its financial projections.
UnitedHealth is down 29.7% since the beginning of the year, and at $354.43 per share, it is trading 43.3% below its 52-week high of $625.25 from November 2024. Investors who bought $1,000 worth of UnitedHealth’s shares 5 years ago would now be looking at an investment worth $1,176.
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