UnitedHealth shares fell 3% on Monday after Berkshire Hathaway disclosed it had sold its entire stake in the healthcare conglomerate as part of a comprehensive portfolio overhaul. According to the company's most recent 13F regulatory filing covering portfolio holdings through March 31, Berkshire sold off its complete position of approximately 5 million shares in UnitedHealth. The exit was particularly swift, as Berkshire had only first purchased the stock in August 2025 when the insurer's stock was in freefall, meaning the holding lasted less than a year. This marks a significant reversal from when Berkshire disclosed it bought 5 million shares of UnitedHealth, which had then lifted the stock as investors bet on a turnaround under CEO Stephen Hemsley. As per Reuters, Bill Stone, chief investment officer at the Glenview Trust Company, noted that "Berkshire Hathaway's stock moves tend to have an impact on stocks whether it was Warren Buffett behind the change or not," adding that "(UnitedHealth) has had a nice move this year, so perhaps this added to the temptation of profit taking since Berkshire exited."
The UnitedHealth exit is part of a sweeping portfolio overhaul being carried out by Berkshire Hathaway's new CEO Greg Abel, who took over as CEO on January 1 after Warren Buffett stepped back from the role. According to the latest 13F filing, Berkshire also fully closed positions in Amazon, Domino's, Pool Corp, Mastercard and Visa during the first quarter, while opening new positions in Delta Air Lines and Macy's, and expanding its stakes in Alphabet and The New York Times. Abel indicated in February that his responsibility extended to 94% of Berkshire's equity portfolio, leaving the other 6% in the hands of investment manager Ted Weschler. Todd Combs, who left Berkshire in December to become an executive at JPMorgan Chase, is thought by many observers to have been the architect of the UnitedHealth position.
Despite the Berkshire exit, UnitedHealth's operational improvements remain intact with the company reporting first-quarter 2026 results that beat Wall Street expectations and raising its full-year profit forecast. The insurer reported first-quarter revenue of $111.7 billion, representing a 2% increase year over year, with adjusted EPS coming in at $7.23, beating expectations. The company demonstrated strong margin discipline with the medical care ratio falling to 83.9%, down 90 basis points from the prior year, reflecting improved operating leverage. Management raised its full-year 2026 adjusted EPS guidance to at least $18.25, up from the previous $17.75. The stock rallied roughly 9% on the earnings beat and guidance lift, kicking off a run that carried the stock into the $400 neighborhood. However, Optum Health, UnitedHealth's profitable health services arm, reported first-quarter revenue of $24.1 billion, down 3% year over year, driven by fewer value-based care members, though management indicated it's "performing better than expected, sooner than expected."
While UnitedHealth's operational turnaround continues, the stock's 45% rally from February lows has compressed the margin of error for future performance. The stock currently trades at $400.53 with a trailing P/E in the 18-to-20x range and a price-to-free-cash-flow multiple of 18.6x. The company generated $20.7 billion in free cash flow in 2024 and yields roughly 2.2% on a recently increased $8.84 annual dividend. However, analysts note that the valuation test isn't whether the multiple is historically cheap but whether it has room to go higher from current levels. The next earnings report is expected in late July 2026, with investors needing to see Optum Health revenue stabilizing or growing, medical care ratio holding at or below Q1 levels, and membership numbers trending back upward to justify the current premium valuation.
