| Prior Quality Score (uncompressed) | 75 | ↓ MCR spike adjustment | -20 | = | 55 |
| Additional adjustment: Margin normalization expected at 87% by 2027 adds +5 points to Quality score (not shown above), creating 50-point swing potential if achieved. | |||||
Sector Profile: Healthcare / Managed Care — Metrics: Revenue growth, MCR (Medical Care Ratio), operating margin, cash generation, ROIC, balance sheet strength
| Dimension | Detail |
|---|---|
| Sector | Healthcare / Managed Care |
| Lifecycle | Stage 4 — Mature (<15% growth, profitable, stable cash flow) |
| Metric Profile | Insurance-like metrics (MCR as primary profitability metric, ROE, operating margin) |
| Note | UNH is hybrid: health insurance (UnitedHealthcare) + health services/tech (Optum). Scored primarily on insurance metrics for UHC and services margins for Optum. |
| Sub-Signal | Raw Data | Sector Context | Score | Rationale |
|---|---|---|---|---|
| Revenue Trajectory | $447.6B (+12% YoY FY25), 2026 guide >$439B (-2%) | MCO median: ~8-10% | 45 | Strong FY25 growth but guided down for 2026 as company "right-sizes" |
| Profitability (MCR) | 88.9% (FY25) vs 85.5% (FY24) | Peer median: 83-86% | 30 | 340bps deterioration alarming. UHC segment margin collapsed from 5.2% to 2.7% |
| Operating Margin | 3.33% (FY25) vs 5.01% (FY24) | Peer median: 4-6% | 32 | Significant margin compression. 2026 recovery expected with Optum at ~5.1% margin |
| Cash Generation | FCF $16.07B (FY25), down 22% from $20.7B. FCF margin 3.6% | Top quartile FCF yield | 55 | FCF decline concerning but absolute level strong. Cash conversion healthy. |
| Balance Sheet | Net Debt/EBITDA 2.1x, D/E 0.82, Cash $28.12B, Debt $78.39B | Fortress relative to peers | 70 | Leverage manageable. Cash position strong. No refinancing risk. |
MCR FY2025: 88.9% | FY2024: 85.5% | FY2023: ~83%
Rating: DETERIORATING — MCR trending wrong direction for 3 years
Benchmark Score: 35/100
Context: Managed care peer median MCR is 83-86%. UNH at 88.9% well above peers. UHC segment specifically at loss-making levels. Biden-era Medicare funding cuts + elevated utilization are primary causes.
| Component | Score | Detail |
|---|---|---|
| ROIC (40%) | 35 | ROIC at 8.92%, declining trend. Below cost of capital. Below peer median. |
| Capital Allocation (30%) | 50 | Optum acquisitions strategic but returns declining. Buybacks ongoing. Dividend well covered. |
| Management Skin in Game (30%) | 85 | CEO Hemsley bought 86,700 shares (~$25M) at $288.57/share. CFO Rex bought 17,175 shares (~$5M). Strong insider conviction. |
| Multiple | Current | Sector Median | 5-Year Avg | Historical Decile | Score |
|---|---|---|---|---|---|
| Forward P/E | 15.8x | 15.4x | 25.2x | Decile 2 (bottom 20%) | 72 |
| Trailing P/E | ~21.3x | 12.1x (insurance) / 28.5x (healthcare svcs) | 25.2x | Decile 3-4 | 60 |
| EV/EBITDA | 14.55x | 12-15x for MCOs | 16-18x | Decile 3 | 62 |
FCF: $16.07B / Market Cap ~$279B = 5.76% FCF yield
Interpretation: Attractive (5-8% range). Business generating substantial cash relative to price even with margin compression.
Score: 72
| Timeframe | Trend | Direction | RSI | MACD | Key S/R | Breakout |
|---|---|---|---|---|---|---|
| Monthly | Strong Down ↓ | Bearish | ~35 | -, falling | S: $234.67, R: $450 | None |
| Weekly | Downtrend ↓ | Bearish | ~38 | -, below signal | S: $290, R: $364 | Death cross (SMA50 below 200) |
| Daily | Consolidation | Neutral | ~42 | Below 0, recovering | S: $293, R: $322 | Potential bounce off 50-day SMA |
| 4-Hour | Bounce | Mixed | ~55 | Flattening | S: $295, R: $312 | None immediate |
| Metric | Value | Interpretation |
|---|---|---|
| Risk/Reward Ratio | 1:0.95 (poor) | Target $364, Stop $235. Asymmetric downside to upside. |
| Relative Strength vs SPY | -45% underperformance YTD | UNH down much more than broad market. Sector headwinds evident. |
| Relative Strength vs Healthcare Sector | -40% underperformance | Worse than healthcare peers. Insurance-specific headwinds (MCR, Medicare pressure). |
| Catalyst Clustering | Moderate (55/100) | Q1 earnings Apr 21. Potential MCR improvement narrative. Policy changes post-election. |
MCR normalizes to 86% by 2027 due to Optum efficiency gains. Medicare Advantage competitive landscape stabilizes. Regulatory risk from DOJ fades. Optum growth accelerates to 15%+.
Target: $420 (+37% from $307)
MCR gradually improves to 87.5% by 2027. Earnings recovery trajectory as guided. DOJ risk manageable, no material penalty. Valuation rerate toward 17-18x forward P/E.
Target: $380 (+24% from $307)
MCR stays at 88-89% range. Earnings growth disappoints. DOJ investigation results in significant fine (>$1B). Sector valuations compress on macro concerns. Margin normalization delayed.
Target: $260 (-15% from $307)
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"ticker": "UNH",
"analysis_date": "2026-04-08",
"analysis_time": "14:30",
"current_price": 306.88,
"short_term_signal": "HOLD",
"medium_term_signal": "HOLD",
"long_term_signal": "HOLD",
"quality_score": 46,
"quality_detail": {
"revenue_growth_score": 45,
"profitability_mcr_score": 30,
"operating_margin_score": 32,
"cash_generation_score": 55,
"balance_sheet_score": 70,
"moat_score": 64,
"roic_percentile_vs_peers": 35,
"capital_allocation": 50,
"management_skin_in_game": 85
},
"valuation_score": 65,
"valuation_detail": {
"fcf_yield": 5.76,
"implied_growth_rate": 3,
"consensus_growth_rate": 11,
"historical_valuation_decile": 2
},
"timing_score": 41,
"timing_detail": {
"mtf_confluence": 36,
"risk_reward_score": 35,
"relative_strength_vs_spy": -45,
"relative_strength_vs_sector": -40,
"catalyst_clustering_score": 55,
"dynamic_macro_weight": 0.10
},
"driver_score": 60,
"overall_confidence": 45,
"fair_value_est": 380,
"stop_loss": 234.67,
"target_price": 400,
"gates_triggered": ["earnings_event_risk"],
"do_not_buy_triggers": [],
"next_check_date": "2026-04-22"
}
Stock Signal v4 Analysis | UnitedHealth Group (UNH) | April 8, 2026 @ 2:30 PM ET
This is a quantitative framework for educational purposes only. It is not financial advice. Consult a licensed financial advisor before making investment decisions.