Key Takeaways UNH climbed 12% in the past month, narrowing its YTD loss to 29.1% and outperforming the industry.Earnings outlook is weak: 2025 EPS projected to drop 41.4% YoY; Q3 EPS expected to be down 59.9% YoY.Despite challenges, UNH maintains scale, diversification and strong cash flow: $6.3B generated in H1 2025.UnitedHealth Group Incorporated (UNH) has staged a sharp comeback, with shares climbing 12% over the past month, trimming its year-to-date loss to 29.1%. The move marks an outperformance versus ...

Core Insights - UnitedHealth Group and Cigna are leading players in U.S. managed care insurance, facing challenges from rising medical costs and regulatory pressures [1][2] - Investors are concerned about profitability and guidance credibility in the current healthcare environment [1] UnitedHealth Group - UnitedHealth is a dominant force in managed care, supported by its Optum healthcare services and extensive Medicare Advantage and commercial insurance presence [3] - The company is experiencing increased pressure with medical loss ratios exceeding expectations due to higher utilization rates [3] - UnitedHealth withdrew its earnings outlook in May 2025, citing unexpected costs and missed earnings estimates in Q1 2025 [4] - The company generated operating cash flows of $5.5 billion in Q1 2025, a significant increase from $1.1 billion in the previous year [6] - UnitedHealth's dividend yield stands at 2.95%, higher than the industry average of 2.42% and Cigna's 1.96% [6] Cigna Group - Cigna has strategically divested from Medicare Advantage and related businesses, focusing on a commercial-heavy model that offers more predictable performance [7] - The company reported strong Q1 2025 results, benefiting from premium rate hikes and improved client relationships [7] - Cigna raised its full-year adjusted EPS guidance to at least $29.60, contrasting with peers that have lowered or withdrawn guidance [10] - Cigna's long-term debt-to-capital ratio is 39.56%, lower than the industry average and UnitedHealth's 42.87% [11] - Cigna's stock trades below Wall Street's average price target, indicating a potential upside of 22.5% [11] Valuation and Performance Comparison - Cigna's P/E ratio is 9.82, compared to UnitedHealth's 12.67, suggesting a more attractive risk-reward profile for Cigna [13] - Year-to-date, UnitedHealth shares have declined by 40.8%, while Cigna shares have increased by 11.8%, outperforming the broader industry [14] - Zacks Consensus Estimates favor Cigna, with upward revisions in EPS estimates, while UnitedHealth has seen multiple downward revisions [12] Conclusion - Cigna is positioned as a more favorable investment option due to its strategic focus on commercial business and proactive reforms, while UnitedHealth faces significant regulatory scrutiny and cost pressures [16][17]