Would Warren Buffett Buy UnitedHealth Group (UNH)?

By Track N Grow | April 2025

Buffett has long said that his favorite holding period is “forever.” But before he buys, he looks for four key traits:

1. A durable competitive moat
2. Strong and honest management
3. Consistent, predictable earnings
4. A fair price — ideally with a margin of safety

UnitedHealth Group (UNH) — a titan in U.S. healthcare — checks many of these boxes. But after a major earnings surprise in 2025 and a sharp drop in the stock, investors are rightly asking:

Would Buffett buy UNH today?

🛡️ 1. Does UNH Have a Durable Moat?

Absolutely.

UnitedHealth combines insurance (UnitedHealthcare), pharmacy benefit management (Optum Rx), outpatient care (Optum Health), and health data analytics (Optum Insight). This vertically integrated model creates cost advantages, network effects, and switching costs for clients and partners.

Buffett Test: ✅ Yes, UNH has a strong and defensible moat.

👨‍✈️ 2. Is Management Capable and Aligned?

UNH’s leadership has delivered consistent growth, high returns on equity, and steady capital allocation for decades. But 2025 exposed cracks in execution: underestimated medical utilization and margin pressure in Optum Health led to a rare guidance cut.

Buffett Test: ⚠️ Yes — but with some short-term concerns around forecasting discipline.

💵 3. Are the Earnings Predictable and Strong?

Over the past 10 years, UnitedHealth has delivered outstanding compounding:

• Revenue CAGR: 11.9%
• EPS CAGR: 10.5%
• Free Cash Flow CAGR: 12.1%
• Return on Equity (Median): 24.8%
• ROIC (Median): 13.2%
• Dividends Per Share (2015 → 2024): $1.88 → $8.18

But 2025 shook that stability:

• EPS Guidance Cut: From ~$30 to $26–$26.50
• Medical Cost Spike: Far above expectations
• Stock Reaction: ~20% drop in one day

Buffett Test: ⚠️ Earnings power is strong, but 2025 adds some uncertainty.

💰 4. Is the Stock Attractively Valued?

After the drop, UNH trades around:

• Forward P/E: ~15.6
• PEG Ratio: ~1.85
• Dividend Yield: ~2%
• ~35% Below 52-Week High

Buffett Test: ✅ Possibly undervalued, depending on confidence in recovery.

⚠️ What Triggered the Panic? The Q1 2025 Earnings Shock

In April 2025, UnitedHealth’s Q1 earnings release sent shockwaves through Wall Street.

Management announced a sharp downward revision of 2025 EPS guidance, cutting expectations from ~$30 to just $26–$26.50. The reason? A spike in medical cost inflation, especially among Medicare Advantage patients, where care usage far exceeded internal forecasts. Optum Health also came under pressure from a less favorable patient mix with lower reimbursement rates.

The result? A nearly 20% single-day drop in the stock — its worst fall in over two decades. But revenues still grew nearly 10%, and the company’s core model remains intact.

🧠 Buffett-Style Reflection

“A great business is not one that avoids all problems — it’s one that solves them fast.”
— Warren Buffett

UnitedHealth has all the hallmarks of a Buffett stock: dominant market position, high returns on capital, strong free cash flow, and a history of disciplined capital allocation.

But Buffett also wants clarity and predictability — and 2025 has introduced uncertainty. A cautious Buffett might watch closely but wait for more signs of stability before buying big.

🏁 Final Word: Would Buffett Buy UNH?

This isn’t a turnaround story — it’s a temporary fever in an otherwise world-class patient.

So would Buffett buy UNH?
Probably not with both hands — but he’d definitely be watching with interest, and nibbling if he saw further weakness.

🏁 Updated Final Word (15 May 2025): Would Buffett Buy UNH at $274?

This isn’t just a temporary fever anymore — the market now appears to be pricing in organ failure, despite the patient showing signs of recovery.

At $274, with a forward P/E near 12, UnitedHealth is trading at valuation levels typically reserved for broken or shrinking businesses — not one with a long track record of double-digit earnings growth, dominant market share, and consistent free cash flow.

So would Buffett buy UNH now?

He may still not back up the truck — but at this level, he’d likely be buying more aggressively, confident that the business’s long-term value far exceeds today’s fear-driven price.

📰 Update (01 Sep 2025) — Berkshire Joins the Party: Buffett Finally Buys UNH

In a move that caught many by surprise, Berkshire Hathaway disclosed in August 2025 that it had acquired approximately 5.04 million shares of UnitedHealth Group (UNH), valued at around $1.57 billion as of June 30.

This marks Buffett’s return to UNH after previously holding about 1.18 million shares between 2006 and 2009 but fully exiting by 2010.

What This Means (From a Buffett Lens): Buffett’s move validates UNH’s long-term fundamentals — moat, scale, cash flows — despite near-term headwinds. It also shows a classic contrarian tilt: buying into fear while sizing the stake modestly (about 0.6 % of Berkshire’s equity portfolio) as management works through cost inflation and regulatory risk.

Revised Final Word: The answer is now a resounding yes — at least in part. Buffett’s recent stake indicates confidence in the long arc of value and a willingness to lean into near-term uncertainty. It doesn’t guarantee UNH’s problems are solved, but it transforms UNH from a “maybe worth nibbling” into a case study in how a great business handles turbulence — one that even the Oracle finds worthy of a seat in his portfolio.

Related Read:
UnitedHealth Group (UNH) Stock Analysis
Top Buffett-Style Stock Picks

Disclaimer: This article is for educational purposes only and does not constitute investment advice. Always do your own research before investing.