In the ever-evolving health insurance landscape, UnitedHealth Group Incorporated (UNH Quick QuoteUNH - Free Report) and Humana Inc. (HUM Quick QuoteHUM - Free Report) stand as two dominant forces. Both companies have built resilient business models rooted in Medicare Advantage (MA), pharmacy benefit management and healthcare services, pillars that will remain vital as the U.S. population continues to age.

While UnitedHealth boasts a diversified empire spanning insurance, care delivery and analytics, Humana’s focused approach to government-backed plans has cemented its leadership in the MA space. With demographic trends, utilization shifts and policy reforms reshaping the sector, investors are paying close attention to both names.

As healthcare costs rise and enrollment dynamics evolve, one critical question looms: Which insurer offers the stronger prescription for investors today? Let’s take a closer look at their fundamentals to find out which stock truly comes out on top.

The Case for UnitedHealth

With a market capitalization of $330.1 billion, UnitedHealth has long set the benchmark for scale and diversification in managed care. Its operations are divided between UnitedHealthcare, which provides insurance coverage and Optum, a fast-growing arm offering healthcare services, analytics and pharmacy benefit management. This integrated structure helps cushion the company against volatility in any one area.

In its latest reported quarter, UnitedHealth delivered revenues of $111.6 billion, up 12.9% year over year, supported by solid domestic commercial membership growth and ongoing strength in Optum Rx. However, rising medical utilization has pressured margins, especially within its MA business. The company’s medical care ratio climbed to 89.4%, up from 85.1% a year earlier, signaling higher medical costs that left a smaller share of premiums after claims.

The Optum brand continues to be a long-term growth driver, generating $67.2 billion in revenues in the last reported quarter, up 6.9% from last year. Yet, it is facing near-term pressure in its Optum Health unit. While UNH’s scale and vertical integration offer unmatched stability, growth in its Medicaid book has remained tapered. The company is currently under scrutiny over its Medicare billing practices, reimbursement methods, and Optum Rx operations.

Additionally, UNH is facing questions surrounding its handling of the loans to healthcare providers following the 2024 Change Healthcare cyberattack. From a balance sheet standpoint, UNH’s long-term debt-to-capital ratio of 43.7% exceeds Humana’s 40.8%, indicating slightly higher leverage. Its current share price also trades above its average analyst target of $363.32, implying a modest 0.3% downside risk. In contrast, Humana’s stock trades below its average target of $292.42, signaling an estimated 3% upside potential.

The Case for Humana

Though smaller in scale with a market cap of $34.2 billion, Humana has carved a niche as a Medicare Advantage specialist. The company is showing signs of stabilization, with its benefit ratio improving to 88.7% in the first half of 2025 from 89.4% a year earlier, a reflection of better cost discipline and pricing efficiency despite elevated industrywide utilization.

In the last reported quarter, Humana posted adjusted revenues of $32.4 billion, rising 10.2% year over year, fueled by strength in state-based contracts and CenterWell performance. Improving membership figures in Medicare Supplement, Group Medicare Advantage and Medicare Stand-Alone PDPs are providing some relief amid declining overall memberships.

Humana’s renewed focus on value-based care and operational efficiency is beginning to pay off. Its CenterWell primary care centers continue to expand, lowering long-term medical costs and boosting member retention through coordinated care delivery. This approach enhances profitability while ensuring sustainable growth in its footprint.

While UnitedHealth’s vast Optum network gives it size, Humana’s more agile structure allows it to adapt faster to regulatory and reimbursement changes. The company’s efforts to streamline operations, exit unprofitable segments and reinvest in Medicare Advantage growth position it favorably for the coming days.

How Do Zacks Estimates Compare for UNH & HUM?

Analysts anticipate a rebound in Humana’s 2025 earnings, with the Zacks Consensus Estimate standing at $17.05 per share, implying 5.2% year-over-year growth as its cost pressures ease and enrollment stabilizes. Over the past month, the estimate has seen one upward revision with no downward adjustments. Historically, HUM has beaten estimates in three of the last four quarters and missed once, delivering an average earnings surprise of 9.6%.

Humana Inc. Price, Consensus and EPS Surprise

Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. Quote

For UnitedHealth, consensus forecasts 2025 EPS of $16.16, reflecting a steep 41.6% year-over-year decline. The estimate has remained unchanged over the past month, signaling limited near-term optimism. Over the last four quarters, UNH beat twice and missed twice, posting an average negative surprise of 3.3%.

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote

Valuation: UNH vs. HUM

Humana trades at a forward P/E of 20.81X, below UnitedHealth’s 21.29X, offering a relative discount despite a stronger projected rebound in 2025. This valuation gap suggests investors may be underestimating Humana’s margin recovery potential and efficiency gains. HUM carries a Value Score of A.

Meanwhile, UNH’s premium multiple reflects its size and defensive appeal, but with growth moderating and cost pressures lingering, the upside appears constrained. UNH carries a Value Score of B.

Image Source: Zacks Investment Research

Price Performance Comparison

Year to date, Humana’s shares have gained 16.4%, sharply outperforming UnitedHealth’s 27.8% decline, the broader industry’s 21.7% drop and the S&P 500’s 15.6% growth. This contrast highlights improving investor confidence in Humana’s turnaround plan, cost containment and earnings visibility.

The positive price action suggests that markets are starting to recognize Humana’s repositioning efforts, while sentiment toward UnitedHealth remains muted amid uncertainty surrounding its medical cost trends and regulatory investigations.

Price Performance – UNH, HUM, Industry & S&P 500

Image Source: Zacks Investment Research

Conclusion

UnitedHealth continues to reign as the industry’s most diversified and stable player, supported by its vast Optum platform and balanced revenue streams. However, the near term looks challenging, with elevated utilization, regulatory probes and margin pressure clouding its growth trajectory.

Humana, though smaller, is regaining momentum through disciplined cost control, sharper focus on Medicare Advantage, and expanding CenterWell operations. Its leaner structure, targeted strategy, and more appealing valuation give it an edge in both recovery speed and growth potential.

In this battle of healthcare giants, Humana emerges as the healthier option to add to your portfolio; better positioned to capture the demographic tailwinds and policy-driven opportunities ahead, even though both companies currently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.