UnitedHealth: A Pause for Thought (and Possibly Sanity)

Now, UnitedHealth Group (UNH +1.58%). A name that rolls off the tongue like a particularly complicated legal disclaimer. It’s had a year, shall we say, of ‘adjustments’. Down nearly 34% as of January 20th? That’s not merely a dip; that’s a polite request from the market for a lengthy sit-down and a frank discussion about expectations. And, let’s be honest, in the grand scheme of things, a company that deals in the delicate art of… well, managing other people’s ailments, tends to attract scrutiny. It’s the nature of the beast. Or, in the terminology of the Guild of Alchemists and Venture Capitalists¹, ‘inherent risk factors.’

They’re undergoing a transition, naturally. A new CEO, arriving in May 2025, which is roughly equivalent to a wizard taking over the accounts department at Unseen University. Things are…shifting. But the core business – the bit where they handle the flow of premiums and, eventually, pay out for things going wrong – remains stubbornly intact. Still, there are enough question marks hanging about like lost souls that a cautious investor might consider a brief pause before committing their gold… or, you know, dollars.

Therefore, a suggestion: wait until January 27th. Just a little breathing room. A moment to consider whether the stars are aligned, the runes are favorable, and the market isn’t about to do something spectacularly irrational.²

Why the 27th, you ask?

Well, it was after a rather disappointing start to 2025 that UnitedHealth suspended its profit forecast. Suspended, mind you. Not ‘revised downwards’, not ‘adjusted for unforeseen circumstances’ – suspended. As if the future itself had become temporarily unavailable. And, for the first time in a long while, they missed a quarterly earnings estimate. Since 2008, no less. That’s a long time to avoid disappointing the market. It’s almost suspicious.

The explanation involved more surgeries, more doctor visits, and a greater demand for specialized services. Which, when you think about it, is just a polite way of saying ‘people are getting sick’. A rather fundamental truth, and one that often gets overlooked in the endless pursuit of quarterly gains. More utilization of services translates to more insurance claims, and more money flowing out of UnitedHealth. It’s a simple equation, really. Though the market seems determined to complicate everything.

On January 27th, they’ll release the full-year 2025 results and, crucially, offer some guidance for 2026. Guidance isn’t a guarantee, of course. It’s more of a hopeful suggestion whispered into the void. But it will give investors a glimpse into what the company expects. Or, at least, what it wants investors to believe it expects.

What to Look For on the 27th

Three key things. Three vital signs. Monitor them closely, like a seasoned apothecary checking the pulse of a particularly fragile patient. Projected Earnings Per Share (EPS), Operating Margin, and the Medical Care Ratio (MCR). Think of them as the three pillars supporting the entire edifice of UnitedHealth’s financial health.

Ideally, the estimated 2026 EPS should be at least $17.25. A decent step above the projected $16.25 for 2025. It’s not about being greedy; it’s about demonstrating progress. And progress, my friends, is a rare and precious commodity.

Operating margin. Around 4% to 5% is a solid range. It sounds low, doesn’t it? But health insurance is a notoriously low-margin business. The money comes from volume. Lots and lots of volume. It’s like selling sand. You need to shift a lot of it to make a decent profit.³

And finally, the MCR. The percentage of premiums spent on medical claims. If they make $100 million and spend $75 million, the MCR is 75%. It’s a simple calculation, but it reveals a lot about the company’s efficiency. A lower MCR is generally better, but it also suggests they might be… shall we say… economical with their payouts. Which is a delicate balancing act, to say the least.

If UnitedHealth can check those boxes – or at least two out of three – its valuation will become… compelling. Difficult to ignore. A siren song for long-term investors. Though, as any seasoned sailor will tell you, siren songs are rarely what they seem.

The Guild of Alchemists and Venture Capitalists is a notoriously secretive organization dedicated to transforming base capital into… well, more capital. Their methods are often questionable, and their success rate is surprisingly high.

Market irrationality is a force of nature. It cannot be predicted, controlled, or reasoned with. One can only brace for impact.

The ancient art of sand-shifting is surprisingly lucrative, but it requires a dedicated workforce and a complete disregard for environmental regulations.

2026-01-22 19:22

Why the 27th, you ask?

What to Look For on the 27th

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