UnitedHealth is America’s largest health insurer and, through Optum, its largest employer of doctors and one of the three big pharmacy-benefit managers. After profits collapsed in 2025, margins are recovering and guidance has been raised three times this year.
Today’s close against the report’s numbers, updated every weekday. The analysis is as of October 22, 2026; the rating as of October 22, 2026. Both change only when the report is revised.
The cash-flow model’s bear-to-bull range, the probability-weighted value, the price, its 52-week range and the analysts’ average target. The copper line marks the base case; the fine dotted line is today’s close.
Written on October 22, 2026, after its third-quarter results. Figures are from the company’s filings and releases unless noted. Not investment advice. The author holds no UNH shares directly.
UnitedHealthcare insures tens of millions of people through employers, Medicare Advantage and Medicaid. Optum Health employs or contracts with tens of thousands of doctors; Optum Insight sells data, software and claims services to hospitals and insurers; Optum Rx manages drug benefits.
The combination is the point and the controversy: UnitedHealth earns money on both sides of many transactions, which lowers costs when it works and draws scrutiny from regulators.
Third-quarter revenue was flat at $112.7 billion as UnitedHealth shed unprofitable members, but earnings from operations rose 52% to $6.6 billion and adjusted earnings to $4.69 a share, well above forecasts. The medical care ratio, the share of premiums paid out in care, fell to 88.4% from 89.9%, helped by $610 million of favorable reserve releases. Optum Health’s profit rose to $735 million from $41 million.
Guidance was raised for the third time, to at least $20.50 a share. Medicare Advantage margins should end the year near the top of the 2–4% target and Medicaid margins return to target by the end of 2028; commercial medical costs remain above the 11% trend the company assumed.
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|
| Revenue | $287.6B | $324.2B | $371.6B | $400.3B | $447.6B | $450.1B |
| Operating margin | 8.3% | 8.8% | 8.7% | 8.1% | 4.2% | 4.8% |
| Net income | $17.3B | $20.1B | $22.4B | $14.4B | $12.1B | $14.1B |
| Operating cash flow | $22.3B | $26.2B | $29.1B | $24.2B | $19.7B | $27.0B |
| Capital spending | $2.5B | $2.8B | $3.4B | $3.5B | $3.6B | $3.4B |
| Free cash flow | $19.9B | $23.4B | $25.7B | $20.7B | $16.1B | $23.6B |
The operating margin fell from more than 8% to about 4% in 2025 as medical costs, especially in Medicare Advantage, ran far ahead of what UnitedHealth had priced, and it changed chief executive and faced a federal investigation of its Medicare billing. The last column is to June 2026, before the third-quarter recovery. The quarterly view shows each quarter.
At September 30 UnitedHealth had $74.3 billion of debt and $28.5 billion of cash and short-term investments, much of it held by regulated insurance subsidiaries. Its debt-to-capital ratio was 41.7%, above its 40% target. It bought back $5.0 billion of shares and paid $6.2 billion of dividends in the first nine months.
| Assumption | Base case | Basis |
|---|---|---|
| Revenue, 2026 | about $450B | Run rate |
| Growth, 2027 and 2028 | 4%, then 7% | Repricing first, membership growth later; fades to 3% by year 10 |
| Operating margin | 5.5% rising to 7% | Guidance-implied today; still below the 8–9% before 2025 |
| Reinvestment | $1 for every $6 of new revenue | Capital-light, but insurers must hold reserves |
| Discount rate | 8.0% | Beta 0.80, this site’s floor (measured 0.61), 16% debt |
| Terminal growth | 3.0% | With a 20% return on new capital |
| Bear | Base | Bull | |
|---|---|---|---|
| Growth, 2027 / 2028 | 2% / 4% | 4% / 7% | 6% / 9% |
| Long-run operating margin | 5.5% | 7% | 8% |
| Discount rate | 9.0% | 8.0% | 7.0% |
| Value per share | $282 | $516 | $839 |
| Probability | 25% | 50% | 25% |
Weighted 25/50/25: $538. The bear case is margins stuck near today’s level as Medicare and drug-pricing rules tighten; the bull case is margins back to their pre-2025 level.
| Discount rate | 7.0% | 7.5% | 8.0% | 8.5% | 9.0% |
|---|---|---|---|---|---|
| Value per share | $655 | $576 | $512 | $460 | $417 |
Every figure in this valuation comes from one model script, rerun and checked against this page each time the site is built. The XLSX model rebuilds it in live formulas: change any blue input and every year’s cash flow, the bridge to the value, the scenarios and the sensitivity table recalculate.
| To justify the price, you need | Against |
|---|---|
| Revenue growth of about 2% a year for two years, then the same fade | 4% and 7% |
| Or a long-run operating margin of about 5.9% | 7% |
The price assumes margins recover only a little from here. The shares rose about 12% after the results, to near their 52-week high; analysts average about $481.
| Risk | Why it matters |
|---|---|
| Medical costs | Commercial cost trend is still above plan; specialty drugs and hospital use keep rising. |
| Medicare Advantage | Government rates, star ratings and coding rules set most of the profit. |
| Investigations | Federal scrutiny of Medicare billing and of Optum’s ties to the insurer. |
| Pharmacy benefits | Rebate pass-through by 2028 and drug-pricing reform reshape Optum Rx. |
| Reserve releases | Part of this year’s improvement came from one-off releases. |
Upside: margins back to pre-2025 levels, Optum Health recovering further, and buybacks resuming at scale once debt is back at target.
UnitedHealth’s margins have started to recover after the 2025 collapse, and guidance has been raised three times. The price assumes an operating margin of about 6% for good, against more than 8% before 2025.
What would change the value: The 2027 outlook, expected around the turn of the year, Medicare Advantage rates for 2028 and the outcome of federal investigations are the next inputs.
Ranges, not three cases. The expected value is the average of 4,000 runs of this report’s own model, with every input drawn from a range: the base case is the middle, and the bear and bull cases are the 10th and 90th percentiles. Business inputs move together; the discount rate moves on its own. The 25/50/25 weighting in the valuation section gives $538. How the ranges work
Two different questions. The rating is relative: it asks whether the stock is cheaper or dearer than the S&P 500 on the same assumptions. The absolute view asks whether it is worth its price at all: on its own the stock trades 22% below our estimated value.
On the same assumptions every report uses (a 5.15% Treasury yield and a 4.5% equity premium), the S&P 500 itself is worth about 68% of its price. The rating compares each stock with that: Buy if it is at least 15% cheaper than the market on this basis, Sell if at least 15% dearer, Hold in between. It is the same rule for every company, whoever owns it. The rating is the same whether the index is assumed to grow 6% or 10% a year. How ratings work
Against the Street: Analysts average about $481, closer to this model’s base case of $516; both assume margins keep recovering.
| Measure | UnitedHealth | Industry median | Rank | |
|---|---|---|---|---|
| Revenue growth, last fiscal year | 11.8% | 7.1% | 12 of 60 | Better than the median |
| Operating margin | 4.8% | 15.8% | 47 of 60 | Worse than the median |
| Price to earnings | 26.1× | 29.4× | 23 of 55 | Better than the median |
| Free cash flow yield | 6.4% | 4.6% | 16 of 59 | Better than the median |
Peers: the 59 other S&P 500 companies in Health Care with complete data (A, ABBV, ABT, ALGN, AMGN, BAX, BDX, BIIB, BMY, BSX, CAH, CI, CNC, COO, COR, CRL, CVS, DGX, DHR, DVA, DXCM, ELV, EW, GEHC, GILD, HCA, HSIC, HUM, IDXX, ILMN, INCY, IQV, ISRG, JNJ, LH, LLY, MCK, MDT, MRK, MRNA, MTD, PFE, PODD, REGN, RMD, RVTY, SOLV, STE, SYK, TECH, TMO, UHS, VEEV, VRTX, VTRS, WAT, WST, ZBH, ZTS). Last twelve months where reported, from SEC filings; prices from the latest close. A lower price-to-earnings ratio ranks higher. These figures update with each data run; the rating does not.
Margins are coming back; the price assumes they stop short.
Defend this call: the hardest questions about this report, answered from it.
| What | Figures | Source |
|---|---|---|
| Latest results | $112.7B (Revenue, Q3 2026, flat), $4.69 (Adjusted EPS, +61%), 88.4% (Medical care ratio, from 89.9%), $6.6B (Earnings from operations) and others | Q3 2026 results (8-K); Earnings call coverage |
| The numbers (five-year table) | Five years of annual figures and the last twelve months | SEC XBRL company facts; latest: 10-K for the period to 2025-12-31, 10-Q for the period to 2026-06-30 |
| Price at writing | $425.06 (Close, Oct 22, 2026) | Yahoo Finance; the time of the quote is stated beside the price |
| Discount rate inputs | 10-year Treasury 5.15%, equity risk premium 4.5% | Fixed for every report so they can be compared; How ratings work |
| Valuation | Every value, case and sensitivity | This site’s model: XLSX, CSV |
| Checked by hand | 13 figures on October 23, 2026 | All match. Audit log |
| Input | Bear (10th percentile) | Base (median) | Bull (90th percentile) |
|---|---|---|---|
| Growth, first forecast year | 2.0% | 4.0% | 6.0% |
| Growth, second forecast year | 4.0% | 7.0% | 9.0% |
| Operating margin, near term | 5.0% | 5.5% | 6.0% |
| Operating margin, long run | 5.5% | 7.0% | 8.0% |
| Discount rate | 9.0% | 8.0% | 7.0% |
| Simulation result | |
|---|---|
| Expected value (average of 4,000 runs) | $519.08 |
| Likely range, 10th to 90th percentile | $339.44 to $711.74 |
| Median | $504.79 |
| Chance the value is above the price | 73% |
| Chance it is cheaper than the S&P 500 | 96% |
Each input is drawn from a split normal: its bear and bull values are the 10th and 90th percentiles, so the two sides can differ. Business inputs share a common factor (correlation 0.6); the discount rate moves on its own. Inputs not listed are held at their base value. How the simulation works.