UnitedHealth jumps after 'vote of confidence' from Warren Buffett
The company is dealing with multiple challenges that have emerged in the last two years, including rising costs, a federal investigation into its government-backed health plans, a cyberattack at its technology unit that affected the personal information of over 192 million Americans, and the murder of its insurance unit chief in December.
Long hailed as a reliable earnings performer, UnitedHealth missed Wall Street's profit expectations for the last two quarters, and its shares have dropped nearly 46% in 2025, making it the worst-performing stock on the blue-chip Dow Jones Industrial Average (.DJI), opens new tab this year.
The shares were last up 11% at $301.42 in premarket trading.
Buffett has swooped in with big investments in companies, in which he sees a long-term strategic value, during their periods of struggle.
He invested heavily in Occidental Petroleum (OXY.N), opens new tab in 2019 as it tried to finance a merger with Anadarko Petroleum and has kept adding to his stake despite the company's weak stock performance. He famously took a stake in investment bank Goldman Sachs (GS.N), opens new tab at the height of the global financial crisis in 2008.
"Buffett's purchase is a psychological reassurance to many investors that saw UnitedHealth as 'untouchable,' given the massive turbulence in the stock over the past few months," said Kevin Gade, chief operating officer at UnitedHealth investor Bahl & Gaynor.
Berkshire owned 5.04 million UnitedHealth shares worth about $1.57 billion as of June 30, it said in a U.S. Securities and Exchange Commission filing on Thursday.
Several other prominent hedge funds, including David Tepper's Appaloosa Management, Lone Pine Capital and Two Sigma Investments, also bought UnitedHealth's shares, regulatory filings showed on Thursday.
While the "vote of confidence" from Buffett's investment validates the long-term value of UnitedHealth shares, the "management needs to regain trust and credibility with investors, and get back to its beat and raise reputation of the past," said James Harlow, senior vice president at Novare Capital Management.
In May, CEO Andrew Witty abruptly stepped down amid rising operational and financial pressures, and Stephen Hemsley, who had run the company from 2006 to 2017, took over.
Last month, the company projected full-year adjusted earnings per share of at least $16, well short of analysts' already lowered estimate of $20.91.
UnitedHealth's shares are currently trading at about 15.8 times forward earnings estimates, below their five-year average of 19.
"While UnitedHealth still faces elevated uncertainty, it is good to see that this renowned investment firm also believes the market is discounting assumptions that are too pessimistic for the long term, which is similar to our view," said Morningstar analyst Julie Utterback.
Shares of rivals Centene (CNC.N), opens new tab, Humana (HUM.N), opens new tab and Molina Healthcare (MOH.N), opens new tab gained between 1.5% and 4% in premarket trading.
Berkshire on Thursday also disclosed new stakes in steel maker Nucor (NUE.N), opens new tab, security products provider Allegion (ALLE.N), opens new tab and outdoor advertiser Lamar Advertising (LAMR.O), opens new tab. Nucor jumped 5.8% to $152.80.
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