United Heatlh Care (UNH) added to SWCM portfolios

We’re pleased to share that we’ve recently added United Health Group (UNH) to SWCM client portfolios as part of our value-based investment strategy.

 

Over the past six months, UNH shares have dropped over 50%, largely due to a modest 2% increase in Medicare Advantage costs and higher related medical expenses. This led to a downward revision in earnings guidance, but UNH is still on track to generate $20.65 billion in net income this year—highlighting the company’s overall resilience.

 

With a current price-to-earnings (P/E) ratio of 12 and a forward P/E of less than 10, UNH represents a compelling value opportunity. The strong profitability, significant discount, and scale of the business align well with our investment principles.

Additionally, the company has undergone a leadership change, with long-standing and highly capable former CEO Steven J. Hemsley returning to lead. Concerns about an uncorroborated DOJ investigation and speculation around Medicare Advantage practices also impacted the stock, though the company has explicitly denied any involvement or information requests regarding these matters.

 

It’s important to note that UNH’s volatility is confined to its United Healthcare segment. The company’s other division, Optum, continues to thrive, delivering robust performance in health services, pharmacy benefits, and data analytics. This diversified structure makes UNH well-positioned to weather temporary setbacks while maintaining long-term financial health.

Please let us know if you have any questions about this addition or if you’d like to discuss your portfolio in greater detail.