We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Not Just Medicare, UnitedHealth's Optum Rx Gets Its Own DOJ Checkup
Read MoreHide Full Article
Key Takeaways
DOJ probe into UnitedHealth expands to Optum Rx and physician reimbursement practices.
Optum Rx generated $5.8B in 2024 income, making any regulatory risk more significant.
UNH's medical care ratio rose from 83.2% in 2023 to 87.1% in the first half of 2025.
The U.S. Department of Justice’s criminal probe into UnitedHealth Group Incorporated (UNH - Free Report) is broader than previously reported, per Bloomberg. While investigators had already been looking at its Medicare Advantage billing practices, they are also examining Optum Rx, the company’s pharmacy benefit manager (PBM), and how UnitedHealth pays physicians. These additional lines of inquiry show that the scrutiny extends well beyond what was initially understood.
UnitedHealth has not been accused of any wrongdoing yet and says it is cooperating with both civil and criminal requests while standing by its practices. Even so, the widening investigation has unsettled investors.
The review of physician payments suggests concern about broader reimbursement practices. Overall, the current administration has already targeted PBMs in its broader effort to reduce prescription drug costs. Together, the new details signal heightened legal and regulatory risk for the nation’s largest health insurer.
Optum Rx, one of the nation’s largest PBMs, delivered $5.8 billion in adjusted operating income in 2024 and $2.8 billion in the first half of 2025. The broader Optum division gives UnitedHealth valuable diversification at a time when escalating medical costs are pressuring its core insurance business. Any regulatory hit to Optum could therefore carry outsized consequences for the company. UnitedHealth’s medical care ratio — a key measure of costs as a percentage of premiums — has already climbed from 83.2% in 2023 to 85.5% in 2024, and further to 87.1% in the first half of 2025.
Peers Suffering From Rising Medical Costs Trend Too
UnitedHealth’s peers, including Centene Corporation (CNC - Free Report) and Elevance Health, Inc. (ELV - Free Report) , are also grappling with rising medical costs, which have already pushed them to trim their 2025 guidance.
Centene lowered its adjusted EPS outlook to $1.75 for 2025, significantly down from the previous estimate of $7.25. It now projects its HBR to spike to 93.5% in the second half of the year compared with 89.4% last year. Similarly, Elevance reduced its adjusted EPS forecast to $30, below the prior $34.15–$34.85 range. ELV’s benefit expense ratio is set to reach 90% in 2025, up from 88.5% witnessed in 2024.
UnitedHealth’s Price Performance, Valuation and Estimates
Shares of UNH have lost 40.6% in the year-to-date period compared with the industry’s decline of 31.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 17.61, still up from the industry average of 14.83. UNH carries a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $16.21 per share, implying a 41.4% drop from the year-ago period.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Not Just Medicare, UnitedHealth's Optum Rx Gets Its Own DOJ Checkup
Key Takeaways
The U.S. Department of Justice’s criminal probe into UnitedHealth Group Incorporated (UNH - Free Report) is broader than previously reported, per Bloomberg. While investigators had already been looking at its Medicare Advantage billing practices, they are also examining Optum Rx, the company’s pharmacy benefit manager (PBM), and how UnitedHealth pays physicians. These additional lines of inquiry show that the scrutiny extends well beyond what was initially understood.
UnitedHealth has not been accused of any wrongdoing yet and says it is cooperating with both civil and criminal requests while standing by its practices. Even so, the widening investigation has unsettled investors.
The review of physician payments suggests concern about broader reimbursement practices. Overall, the current administration has already targeted PBMs in its broader effort to reduce prescription drug costs. Together, the new details signal heightened legal and regulatory risk for the nation’s largest health insurer.
Optum Rx, one of the nation’s largest PBMs, delivered $5.8 billion in adjusted operating income in 2024 and $2.8 billion in the first half of 2025. The broader Optum division gives UnitedHealth valuable diversification at a time when escalating medical costs are pressuring its core insurance business. Any regulatory hit to Optum could therefore carry outsized consequences for the company. UnitedHealth’s medical care ratio — a key measure of costs as a percentage of premiums — has already climbed from 83.2% in 2023 to 85.5% in 2024, and further to 87.1% in the first half of 2025.
Peers Suffering From Rising Medical Costs Trend Too
UnitedHealth’s peers, including Centene Corporation (CNC - Free Report) and Elevance Health, Inc. (ELV - Free Report) , are also grappling with rising medical costs, which have already pushed them to trim their 2025 guidance.
Centene lowered its adjusted EPS outlook to $1.75 for 2025, significantly down from the previous estimate of $7.25. It now projects its HBR to spike to 93.5% in the second half of the year compared with 89.4% last year. Similarly, Elevance reduced its adjusted EPS forecast to $30, below the prior $34.15–$34.85 range. ELV’s benefit expense ratio is set to reach 90% in 2025, up from 88.5% witnessed in 2024.
UnitedHealth’s Price Performance, Valuation and Estimates
Shares of UNH have lost 40.6% in the year-to-date period compared with the industry’s decline of 31.4%.
From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 17.61, still up from the industry average of 14.83. UNH carries a Value Score of B.
The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $16.21 per share, implying a 41.4% drop from the year-ago period.
The stock currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.