UnitedHealth: profit is up 52% while revenue and membership shrink
UNH is not on my watchlist, so I ran the gates for information only.
UnitedHealth had a bad 2025, and 2026 is a profit recovery. Q3, reported on 13 Oct, was profit up and revenue down. Revenue was $112.7B against $113.2B a year earlier, down 0.4%, but above estimates. Earnings from operations were $6.6B against $4.3B. Adjusted EPS was $4.69 against $2.92, up 61%, versus about $4.15 expected. The medical care ratio, the share of premiums paid out in claims, fell to 88.4% from 89.9%. Full-year adjusted EPS guidance went to at least $20.50 from $19.50–20.00. The stock closed at $406.67 on 15 Oct, up 23.2% this year and 11.9% below its 52-week high of $461.62.
The profit came back by shrinking. Medical members fell to 48.3M from 50.1M. Optum Health revenue fell 10% to $22.9B, but its margin rose to 3.2% from 0.2%. Management repriced, cut benefits and exited unprofitable business. That's the right repair, but consensus revenue growth is only +0.1% for 2026 and +3.3% for 2027.
Cash is the strongest part of the case. Free cash flow is $22.8B, the dividend yields 2.28%, and the company returned $11.2B in nine months. At about 17.6× 2027 earnings, the stock is fairly priced for a recovery already showing in the numbers. The open risk is the DOJ criminal and civil Medicare inquiries disclosed in July 2025, with no public outcome. My scorecard gives it 63/100.
My sell-put gates, for information only:
Trend: pass, 13.4% above the 200-day SMA ($358.75).
Earnings: pass. The next print is estimated around 20 Jan 2027, so the 20 Nov monthly clears it. It's one of the few names whose calendar fits a November window.
Volatility: fail. IVR is 18.4 and IVP 36.5, below my 40/45 minimums.
Sizing: fail. A 10%-OTM strike (~$365) ties up $36,500, over my $25,000 single-name cap.
So the calendar fits, but volatility is cheap and the contract is too large. It stays a watch, not a trade.
Personal framework, not investment advice.
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