Is UnitedHealth Group (UNH) Trading at an Attractive Valuation?

Market Performance - The US equity market continued its rally in Q3 2025, with the S&P 500 returning 8.1% and the Russell 1000 Value surging 5.3% [1] - The SCCM Value Equity Strategy returned 6.9% (gross) and 6.8% (net) in the same quarter, outperforming the Russell 1000 Value's 5.3% return but underperforming the S&P 500's 8.1% return [1] - Year-to-date, the strategy returned 13.0% (gross), compared to Russell 1000 Value's +11.7% and S&P 500's +14.8% [1] UnitedHealth Group Overview - UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company with segments including UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx [2] - The stock experienced a one-month return of -13.25% and a 52-week loss of 47.78%, closing at $313.58 with a market capitalization of $284.053 billion on November 18, 2025 [2] Investment Strategy and Challenges - UnitedHealth was purchased in the Value strategy during Q3 2025, recognized as the largest diversified managed care organization in the US [3] - The company's vertically integrated model combines insurance, pharmacy benefit management, data analytics, and provider services, providing a durable cost advantage and network effects [3] - Under previous leadership, the company faced challenges due to aggressive expansion and higher-than-expected medical costs, leading to a decline in earnings [3] - A multi-year turnaround is underway under new leadership, with a focus on cultural reform and operational discipline, aiming for at least $16 in adjusted EPS for 2025 [3] - Strategic actions include repricing for higher medical trends, exiting certain Medicare Advantage plans, narrowing networks, and a conservative approach to ACA participation [3] - Optum Health has reduced its 2025 new patient growth target to 300K and expects nearly $1 billion in cost reductions in 2026 [3]