UNH or ELV: Which Healthcare Titan Will Regain Investor Trust First?

Globe and Mail

5 hours ago

UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV are two of the largest health insurers in the United States, each operating vast networks and diversified healthcare businesses. Today, both face intense headwinds: medical costs are running hotter than expected, regulatory burdens are mounting, and investors have grown uneasy after a string of disappointments. This year, each stock has seen significant declines, reflecting sector-wide uncertainty.
Shares of UnitedHealth have plunged 40.7% in the year-to-date period, while Elevance declined 16%. The broader industry has slumped 31.6% during this time, while the S&P 500 Index witnessed 8.8% growth, backed by tech-related stocks.
While both insurers have endured recent pressure, their operational strategies and financial resilience differ in critical ways. Let's dive deep and closely compare the fundamentals of the two stocks to determine which company is better positioned to restore investor confidence.
The Case for UnitedHealth
UnitedHealth remains the industry's heavyweight, with a market cap of $275.5 billion, nearly four times Elevance's $70.3 billion. Its debt profile is stronger too, with a debt-to-EBITDA ratio of 2.03 compared to ELV's 2.47.
UNH delivers insurance coverage through UnitedHealthcare and health services via Optum, integrating provider, pharmacy-benefit and analytics services. This vertical integration gives UNH strong insight and influence over cost drivers and care utilization. Its operational scale and bargaining power help it negotiate more favorable provider and pharmaceutical contracts compared to smaller players.
In recent quarters, despite cost pressures, UNH has consistently generated robust cash flow, giving it the flexibility to keep investing in growth and weather downturns. That said, cracks are showing: the company lowered its outlook (even pulled it for a brief period) after missing estimates for the first two quarters of 2025.
Medicare Advantage and Medicaid segments have seen margin pressure from unexpected utilization spikes, injecting near-term uncertainty. However, UNH's diversified business lines and ability to pivot through Optum's services provide it with multiple levers to respond to such volatility. The recent Amedisys acquisition extends its reach into in-home care, a move expected to curb medical costs by reducing hospitalizations.
Adding to its credibility, Warren Buffett's Berkshire Hathaway recently disclosed a $1.57 billion stake of more than 5 million in UNH, as of June 30, 2025. Buffett's seal of approval often sparks a wave of copycat buying, reinforcing market confidence in the long-term story.
The Case for Elevance
Elevance also benefits from structural tailwinds like an aging population and expanding into government programs. Its Carelon platform is driving digital and AI-enabled solutions to personalize care, cut costs and sharpen margins, pillars of its future competitiveness.
During the first half of 2025, Elevance managed to generate 15.5% growth in premiums, outpacing UNH's 12.6%. Growing memberships in ELV's Dental, Vision, Medicare Advantage and individual commercial plans should sustain this momentum.
ELV is also contending with elevated medical cost trends, particularly in the ACA and Medicaid segments. This has led to an earnings miss in the second quarter of 2025, with the benefit expense ratio increasing to 88.9% from the 2024-end level of 88.5%, suggesting that a large chunk of premium revenue is going toward claims rather than profitability. For the full year, the metric is expected to hit 90%.
Elevance Health, Inc. Price, Consensus and EPS Surprise
Elevance Health, Inc. price-consensus-eps-surprise-chart | Elevance Health, Inc. Quote
By contrast, UNH's medical care ratio increased to 89.4% in the second quarter from 85.5% in 2024. We expect the metric to average at 89.4% in 2025, signalling relatively strongerprofitability.
Elevance's return on capital of 10.4% is below the industry average of 12.2% and UNH's 13%. Both companies have taken shareholder-value boosting moves. In the first half of 2025, ELV returned more than $2 billion to shareholders through repurchases and dividends, while UNH returned $9.5 billion. ELV's dividend yield of 2.21% is lower than that of UNH's 2.95%.
Nevertheless, Elevance's Carelon segment, which integrates physical, behavioral and social care, is growing rapidly, providing diversification benefits. Recent buyouts in home health and pharmacy services, higher CarelonRx product revenues and the scaling of innovative risk-based capabilities in Carelon Services are major positives.
How Do Zacks Estimates Compare for UNH & ELV?
Both companies are contending with unfavorable estimates from analysts for 2025 earnings due to the rising costs trend. The Zacks Consensus Estimate for UNH's 2025 and 2026 EPS is pegged at $16.58 and $18.08, indicating a year-over-year decline of 40.1% and growth of 9%, respectively.
Image Source: Zacks Investment Research
Meanwhile, the same for ELV is pegged at $30.15 and $32.19 for 2025 and 2026, signaling an 8.8% decline and 6.8% growth, respectively. All these estimates remained stable over the past week.
Valuation: UNH vs. ELV
Coming to the valuation story, it seems that investors are willing to pay a premium for UnitedHealth compared to Elevance. This is reflected in UNH's forward 12-month price/earnings (P/E) of 17.23X compared with ELV's 9.72X. Both are currently trading below their five-year median P/E value.
Bottom Line
UnitedHealth and Elevance both face steep challenges as rising medical costs, regulatory hurdles and shaken investor sentiment weigh on the entire sector. Yet, UnitedHealth has the edge thanks to its unmatched scale, diversified Optum platform, and stronger balance sheet, which provide multiple levers to manage cost pressures and sustain growth. The Amedisys acquisition further deepens its integrated care model, and Buffett's sizable stake underscores confidence in its long-term resilience.
Elevance, while benefiting from Carelon's digital push and strong premium growth, still lags in profitability, debt metrics, capital efficiency and shareholder payouts. Ultimately, even though both stocks currently carry a Zacks Rank #5 (Strong Sell), UnitedHealth appears better positioned to restore confidence as the headwinds ease.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
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