UnitedHealth Faces Legal Storm Amid Ambitious Overhaul

As 2025 draws to a close, UnitedHealth Group finds itself navigating a dual crisis. The healthcare behemoth is confronting a fresh lawsuit from the city of Philadelphia while simultaneously rolling out a sweeping corporate reform initiative. This confluence of events underscores the immense pressure on a company whose shares have dramatically underperformed, ranking as the worst performer in the Dow Jones Industrial Average this year.

The legal landscape for UnitedHealth intensified this week when Philadelphia filed a lawsuit targeting its pharmacy benefits manager subsidiary, OptumRx, along with other industry intermediaries. The city’s complaint alleges illegal collusion with insulin manufacturers to artificially inflate drug prices. Notably, the litigation invokes the Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal statute originally designed to combat organized crime.

This legal action strikes at a core segment of UnitedHealth’s operations. As a major pharmacy benefits manager, OptumRx is a significant revenue driver and has been under heightened regulatory scrutiny for months. This new suit compounds existing pressures, including an ongoing investigation by the U.S. Department of Justice into potential billing violations within UnitedHealth’s Medicare Advantage segment.

Management Responds with a Comprehensive Plan

In a move timed just ahead of this latest legal development, CEO Steve Hemsley—who returned to the helm in May—unveiled a detailed 23-point corrective action plan. The strategy is a direct response to findings from an independent audit and the ongoing DOJ probe, aiming to demonstrate that systemic issues are being addressed.

Key components of the reform blueprint include:
* A complete overhaul of billing and transparency systems across the organization.
* An aggressive timeline targeting completion of 65% of the measures by the end of 2025.
* Full implementation of all actions is scheduled for March 2026.
* The establishment of enhanced internal compliance and control mechanisms.

Should investors sell immediately? Or is it worth buying Unitedhealth?

Divergence Between Business Performance and Share Price

Despite the turmoil, UnitedHealth’s underlying business operations show remarkable strength. The company reported third-quarter 2025 revenue of $113.16 billion, representing a 12.2% year-over-year increase. This robust fundamental performance stands in stark contrast to the equity’s precipitous decline.

UnitedHealth shares have collapsed approximately 36% since the start of the year, trading near their 52-week low of $234.60. This sell-off has pushed the stock’s price-to-earnings ratio down to around 17, a figure well below its historical average of 23. Several market analysts view this pessimism as overdone. Their price targets for the equity range from $392 to $408, suggesting a potential upside of 20% to 25% from current levels.

The Pivotal Year Ahead

The coming months will be decisive for UnitedHealth’s trajectory. The company faces the formidable challenge of executing the initial 65% of its reform plan by year-end—an ambitious goal by any measure. Concurrently, the Philadelphia litigation will begin to unfold, with its outcome likely to set important precedents for the entire healthcare sector.

The pressure is squarely on management to deliver results. If UnitedHealth can successfully combine operational transformation with effective legal defense and damage control, 2026 could see a significant recovery in its share price. However, failure on either front threatens to prolong the company’s current difficulties and erode investor confidence further.