UNH Crashes Publish Q1 Earnings: Ought to You Purchase the Dip With ETFs?

UnitedHealth Group UNH, the most important U.S. well being insurer, reported dismal first-quarter 2025 outcomes. It missed each earnings and income estimates and lowered its full-year steerage amid rising medical prices. This despatched UNH’s shares into the most important tailspin in additional than 20 years, spreading pessimism within the general insurance coverage sector.

UNH shares tumbled 22.4% on the day following the outcomes, marking the worst each day decline since 1998 and the corporate’s fourth-worst day on Wall Avenue since going public in 1984. The hunch has erased about $120 billion from the corporate’s market capitalization. Nevertheless, this appears an overreaction to the earnings announcement and outlook, presenting a strategic long-term shopping for alternative. The historic information reveals UNH’s constant restoration and better buying and selling ranges after important drops.

As such, traders might faucet the beaten-down worth with ETFs having the most important allocation to this medical health insurance big. These are iShares U.S. Healthcare Suppliers ETF IHF, Well being Care Choose Sector SPDR Fund XLV, JPMorgan Healthcare Leaders ETF JDOC, Constancy MSCI Well being Care Index ETF (FHLC) and iShares U.S. Healthcare ETF IYH.

Earnings in Focus

Earnings per share got here in at $7.20, lacking the Zacks Consensus Estimate of $7.27 however enhancing 4.2% from the year-ago earnings of $6.16. Revenues grew 9.8% 12 months over 12 months to $109.6 billion however had been shy of the estimated $111.1 billion. (Discover the most recent EPS estimates and surprises on Zacks Earnings Calendar.)

Optum revenues elevated 4.6% to $63.9 billion. Medical ratio (a measure of the proportion of premiums paid out for medical providers) rose 0.5 share factors 12 months over 12 months to 84.8%. Administration forecasts that the ratio will probably be within the vary of 87%-88% for 2025.

The variety of shoppers served with self-funded industrial advantages elevated by about 700,000 within the first quarter and the variety of folks served by the corporate’s choices for seniors and other people with advanced wants grew by 545,000 and is anticipated to go as much as 800,000 in 2025. Folks served by the corporate’s state-based neighborhood plans elevated to 7.6 million members. Optum Well being continues to anticipate to develop to serve 650,000 new value-based care sufferers in 2025.

The well being insurer reaffirmed its income steerage of $450-$455 billion for 2025 however slashed its earnings per share steerage to $26.00-$26.50 from $29.50-$30.00, citing “heightened care exercise indications inside UnitedHealthcare’s Medicare Benefit companies” and “a greater-than-expected impression to present and new advanced sufferers from the continued Medicare funding reductions enacted by the earlier administration.”

ETFs in Focus

Let’s delve into every ETF under:

iShares U.S. Healthcare Suppliers ETF (IHF)

iShares U.S. Healthcare Suppliers ETF follows the Dow Jones U.S. Choose Healthcare Suppliers Index with publicity to firms that present medical health insurance, diagnostics and specialised remedy. The fund holds 64 securities in its basket. UNH occupies the highest place with a 22.3% share (learn: 6 ETFs Showing Great Resilience Amid Market Sell-Offs).

iShares U.S. Healthcare Suppliers ETF has amassed $683.4 million in its asset base, whereas quantity is nice at about 138,000 shares per day, on common. It prices 40 bps in annual charges and has a Zacks ETF Rank #3 (Maintain) with a Medium threat outlook.

Well being Care Choose Sector SPDR Fund (XLV)

Well being Care Choose Sector SPDR Fund is the most well-liked healthcare ETF and follows the Well being Care Choose Sector Index. It holds 60 securities in its basket, with UnitedHealth taking the second spot at 10.8% of the belongings. Pharma, healthcare gear & provides, healthcare suppliers & providers, and biotechnology take the most important share at 31.2%, 22.5%, 21.5% and 16.3%, respectively, from a sector look.

Well being Care Choose Sector SPDR Fund has AUM of $35.3 billion in its asset base and trades in a heavy quantity of round 11.6 million shares. The expense ratio is available in at 0.08%. XLV has a Zacks ETF Rank #1 (Sturdy Purchase) with a Medium threat outlook.

JPMorgan Healthcare Leaders ETF (JDOC)

JPMorgan Healthcare Leaders ETF is actively managed. It appears to be like to take a position primarily in healthcare shares throughout pharmaceutical, biotechnology, healthcare providers and medical know-how firms. It holds 53 shares in its basket with UnitedHealth occupying the second place at 7.5% of the entire belongings.

JPMorgan Healthcare Leaders ETF has gathered $7.5 million in its asset base and prices 65 bps in annual charges. It trades in a mean each day quantity of beneath 500 shares.

Constancy MSCI Well being Care Index ETF (FHLC)

Constancy MSCI Well being Care Index ETF offers publicity to 349 healthcare shares and tracks the MSCI USA IMI Well being Care Index. UnitedHealth occupies the second place with 7.8% of the belongings. Pharma accounts for 28% share whereas healthcare gear and provides, healthcare suppliers and providers, and biotech spherical off the highest three spots with double-digit publicity every.

Constancy MSCI Well being Care Index ETF has AUM of $2.5 billion. Its expense ratio is 0.08%, whereas quantity is nice at 161,000 shares a day. FHLC has a Zacks ETF Rank #3 with a Medium threat outlook (see: all the Healthcare ETFs here).

iShares U.S. Healthcare ETF (IYH)

iShares U.S. Healthcare ETF gives publicity to 104 U.S. healthcare gear and providers, prescription drugs, and biotechnology firms by monitoring the Russell 1000 Well being Care RIC 22.5/45 Capped Gross Index. Right here once more, UnitedHealth is the second agency, accounting for 8.3% of the entire belongings. By way of industrial publicity, pharma takes the highest spot at 31.23, adopted by healthcare gear (22.1%) and biotech (18.3%).

iShares U.S. Healthcare ETF has amassed $2.9 billion in its asset base whereas charging 39 bps in annual charges. It trades in a great quantity of round 385,000 shares a day and has a Zacks ETF Rank #3 with a Medium threat outlook.