UnitedHealth Group Plunges 6.77%: Can the Healthcare Giant Weather the Storm?

Summary
• UnitedHealth Group (UNH) trades at $263.00, down 6.77% from its 2025-07-29 open of $265.93.
• Intraday range spans $260.55 (low) to $272.87 (high), with 35.87M shares traded.
• Earnings report reveals 89.4% medical expense ratio, up from 84.8% in Q1, amid Medicare cost pressures.
• Sector peers like Elevance Health (ELV) rise 0.83% as UNH’s leadership shuffle and guidance cuts weigh on sentiment.
UnitedHealth Group’s steep decline reflects a perfect storm of deteriorating margins, leadership uncertainty, and a sector-wide cost crisis. With its revised 2025 outlook now at $16/share adjusted earnings—far below Wall Street’s $20.91—investors are fleeing as the company navigates historic Medicare Advantage cost overruns and a post-cyberattack restructuring under new CEO Stephen Hemsley.

Medical Cost Surge and Leadership Shifts Spark Sell-Off
UnitedHealth Group’s 6.77% intraday drop is driven by a combination of deteriorating profitability and leadership instability. The company’s Q2 medical expense ratio hit 89.4%, a record high, as rising patient utilization—particularly for physician and outpatient services—far outpaced premium growth. This mirrors broader industry trends, with rivals like Elevance and Centene also grappling with cost pressures. Compounding the issue, the abrupt ouster of CEO Andrew Witty in May and the return of Stephen Hemsley has introduced operational uncertainty. Meanwhile, the company’s revised 2025 guidance—$16/share adjusted earnings versus $20.91 expected—signals a 23% earnings contraction, triggering a flight to safety.

Healthcare Sector Splits as Elevance Outperforms
While UnitedHealth Group’s stock plunges, Elevance Health (ELV) rises 0.83%, highlighting divergent sector dynamics. Elevance recently cut its 2025 outlook due to exchange and Medicaid costs but has avoided the magnitude of UNH’s sell-off. The healthcare sector, broadly, is under pressure from rising medical inflation and regulatory scrutiny, yet ETFs like XLV (-0.65%) and IHF (-1.64%) remain cautiously positioned. UNH’s leadership turmoil and historic cost overruns, however, have created a unique short-term risk profile distinct from its peers.

Bearish Options and ETFs Signal Aggressive Hedging
• Technical Indicators: 200D MA: $467.03 (far above); 30D MA: $299.62 (above current price); RSI: 30.06 (oversold); MACD: -8.76 (bearish).
• ETF Exposure: IHF (-1.64%) and XLV (-0.65%) reflect sector underperformance, but UNH’s technicals suggest deeper risk.

Top Options:
1. UNH20250808P260 (Put): Strike $260, Expiry 8/8, IV 35.12%, Leverage 54.85%, Delta -0.403, Theta -0.126, Gamma 0.024. High liquidity (749K turnover) and moderate delta position this as a core bearish play. A 5% downside (to $249.85) would yield $9.85 profit per contract.
2. UNH20250808P265 (Put): Strike $265, Expiry 8/8, IV 35.42%, Leverage 36.07%, Delta -0.526, Theta -0.085, Gamma 0.025. High gamma and liquidity (1.29M turnover) make this ideal for a sharper move. A 5% drop triggers $15.15 payoff.

Action Insight: With UNH testing its 52W low of $248.88 and RSI at oversold levels, short-term bears should prioritize the UNH20250808P260 for liquidity and UNH20250808P265 for directional exposure. If the stock breaks below $260, consider rolling into the $250 puts for extended bearish leverage.

Backtest UnitedHealth Group Stock Performance
The backtest of UnitedHealth Group (UNH) after a -7% intraday plunge shows favorable performance metrics. The 3-Day win rate is 50.78%, the 10-Day win rate is 53.71%, and the 30-Day win rate is 58.55%, indicating that the stock tends to rebound in the short term following a significant drop. The maximum return during the backtest period was 3.99%, which occurred on day 59, suggesting that UNH can deliver positive returns even after a substantial intraday decline.

Short-Term Turbulence: Key Levels and Sector Watch
UnitedHealth Group’s 6.77% drop signals acute short-term pain, driven by unsustainable cost trends and leadership instability. While RSI at 30.06 suggests oversold conditions, the 52W low at $248.88 and Bollinger Bands lower bound at $270.88 remain critical near-term levels. Investors should monitor the 30D support (307.12–308.07) and 200D MA ($467.03) for long-term clues. Sector-wise, Elevance’s 0.83% rise highlights divergent trajectories, but UNH’s revised guidance and operational challenges suggest further volatility. Act now: If $260 breaks, target UNH20250808P260 for bearish exposure and watch the 8/8 options chain for catalysts.