Few companies have experienced the dramatic reversal of fortune that befell UnitedHealth Group in 2025. The nation's largest health insurer—once a paragon of consistent execution—stumbled badly, missing earnings for the first time in over a decade and suspending full-year guidance as medical costs spiraled beyond expectations.

Now, with shares down 34% over the past year and trading around $349, UnitedHealth approaches its January 27 earnings report at a crossroads. The question for investors: Is this a buying opportunity of a generation, or the beginning of a more prolonged decline?

The 2025 Debacle

UnitedHealth's troubles began in May 2025 when the company shocked Wall Street with its first quarterly earnings miss in over a decade. The culprit was a surge in medical utilization—patients scheduled more doctor visits and surgeries than the company's actuaries had predicted, forcing UnitedHealth to pay out more in insurance claims than expected.

The miss forced the company to take the extraordinary step of suspending its full-year profit forecast, sending shares into a spiral that erased over $100 billion in market capitalization. Adding to investor anxiety, the company also faced a probe into its Medicare billing practices, raising regulatory concerns alongside operational challenges.

The Cavalry Arrives

Two developments in the latter half of 2025 signaled that smart money sees opportunity in UnitedHealth's distress.

Warren Buffett's Endorsement: Berkshire Hathaway disclosed a $1.57 billion investment in UnitedHealth, acquiring more than 5 million shares. While Buffett has historically avoided healthcare investments due to their complexity, this significant position signals his belief that UnitedHealth's challenges are temporary rather than structural.

"When Berkshire takes a billion-dollar position in a beaten-down blue chip, it's often a sign that the market has overcorrected."

— Investment research commentary on Berkshire's UNH purchase

The Return of a Legend: Perhaps more significant was the return of Stephen J. Hemsley to the CEO role in May 2025. Hemsley, who built UnitedHealth into an industry giant during his previous tenure, came out of retirement to steer the company through turbulence. Shortly after returning, Hemsley purchased more than $25 million worth of company stock with his personal funds—a powerful vote of confidence.

What Q4 Could Reveal

UnitedHealth is scheduled to release full-year 2025 results and 2026 financial guidance on January 27 before markets open. The stakes are enormous.

Analysts expect fourth-quarter earnings of approximately $2.09 per share, representing a steep 69.3% decline from the prior-year period. The dramatic drop reflects the elevated medical costs that plagued the company throughout 2025.

More important than the Q4 numbers, however, will be management's 2026 guidance. Investors want to know:

  • Has medical utilization stabilized, or are costs still running hot?
  • What pricing actions has UnitedHealth taken for 2026 to restore margins?
  • Is the Medicare billing investigation resolved or ongoing?
  • What is Hemsley's strategic vision for returning to growth?

The Bull Case

Bulls argue that UnitedHealth's fundamental competitive position remains unassailable. The company's integrated model—combining insurance (UnitedHealthcare), pharmacy benefits (OptumRx), and healthcare delivery (OptumHealth)—creates synergies that competitors cannot easily replicate.

Barclays analyst Andrew Mok recently raised his price target to $391, maintaining an Overweight rating. He expects managed care stocks to benefit in 2026 as margins recover and investor attention rotates away from AI high-flyers toward more defensive sectors.

Another analyst raised his fair value assessment to $444 per share, implying substantial upside from current levels.

The Bear Case

Bears counter that UnitedHealth's troubles may be symptomatic of broader industry challenges. The post-pandemic surge in healthcare utilization could persist longer than bulls expect, especially as patients who deferred care during COVID years catch up on procedures.

Additionally, regulatory risk remains elevated. The Medicare billing probe could result in significant fines or operational restrictions, and broader healthcare reform discussions continue in Washington.

Valuation Perspective

At current prices around $349, UnitedHealth trades at roughly 20 times fiscal 2026 expected earnings of $17.60 per share. That represents a significant discount to the company's historical premium multiple, reflecting investor uncertainty about the recovery timeline.

For context, analysts project earnings per share of approximately $16.30 for fiscal 2025 (down 41% year-over-year) before rebounding 8% to $17.60 in fiscal 2026. If the company can demonstrate a credible path back to its historical growth rate, multiple expansion could drive substantial returns beyond earnings growth alone.

What to Watch

Ahead of the January 27 earnings report, investors should monitor several developments:

  • Peer commentary: Cigna reports January 22, potentially providing industry context
  • Medicare Advantage trends: Any updates on government reimbursement rates
  • Insider transactions: Whether Hemsley or other executives add to their positions
  • Analyst revisions: Whether estimates are moving higher or lower into the print

The Bottom Line

UnitedHealth's January 27 earnings report represents a defining moment for the healthcare giant. With Berkshire Hathaway's backing and Stephen Hemsley back at the helm, the company has the resources and leadership to execute a turnaround.

However, investors should approach with realistic expectations. The Zacks Rank of #3 (Hold) suggests the prudent course may be waiting for confirmation that the turnaround is taking hold rather than attempting to catch a falling knife.

For those with longer time horizons and tolerance for volatility, UnitedHealth's current valuation and the alignment of Buffett and Hemsley make a compelling case for accumulation. Sometimes the best investments are found when great companies face temporary challenges—and UnitedHealth's challenges, while significant, appear more temporary than terminal.