For decades, UnitedHealth Group (UNH 0.47%) could do no wrong. The company raised its dividend by an exceptional 7,266% from 2010 to 2025, while shares rose as much as 1,700% during this run.

But shares have fallen roughly 40% year to date as the company faces a host of problems, from the murder of Brian Thompson, CEO of major business segment UnitedHealthcare, to federal investigations into allegedly fraudulent Medicare billing practices.

Nonetheless, shares surged 12% on Aug. 14 after filings revealed Berkshire Hathaway had bought over 5 million shares.

Berkshire’s move was seen as a major vote of confidence in the stock — and investors joined a stampede to follow Warren Buffett into the trade. Should you?

Big growth potential for all segments

UnitedHealth operates through four segments. Its UnitedHealthcare segment provides consumer-oriented health benefit plans and services for employers. Optum Health provides healthcare management and financial services, while Optum Insight offers data analysis tools, consulting, and tech solutions to healthcare providers. Optum Rx is a direct-to-consumer platform offering pharmacy services and 190 million prescriptions per year to U.S. homes.

In its second-quarter report on July 29, the company reported quarterly revenue of $111.6 billion, up roughly 13% from the year-ago period. The trouble is with margins. For UnitedHealthcare, the biggest segment, operating margin fell from 6.2% in Q1 2025 to 2.4% last quarter. Combined, margin for the three Optum segments fell from 6.1% in Q1 2025 to 4.6% in Q2.

These declines are steep enough that, even with revenue on the upswing, earnings fell from $9.1 billion in Q1 2025 to $5.2 billion last quarter.

Rising medical costs are the chief headwind. In the July earnings report, new CEO Stephen Hensley acknowledged that UNH “significantly underestimated the accelerating medical trend,” and medical costs totaled $6.5 billion more than anticipated.

But management is under no such illusions now. They’re taking actions to boost efficiency and cut waste, from stepping up audits of clinical policy and payment integrity tools, to scaling artificial intelligence (AI) efforts to improve provider and patient experiences while driving down costs. Implementation of AI technologies is part of initiatives the company hopes can deliver almost $1 billion in cost reductions. Perhaps most significantly, the company is raising premiums after saying it underpriced Medicare Advantage plans in 2025.

In the meantime, each of these segments could grow significantly in the years ahead. UnitedHealthcare Employer & Individual just rolled out services in its 30th state, while Optum Rx’s growth outlook is 5%-8% annually. Optum Insight is targeting operating margin of 18%-22%, while the 4.7 million patients receiving value-based care from OptumHealth represent only a fraction of the nearly 340 million Americans who could fall under its 100-plus health plans.

It’s not just Berkshire buying

Berkshire Hathaway’s move in UnitedHealth is getting headlines. But billionaire David Tepper also scooped up 2.3 million shares, while Michael Burry of The Big Short fame bought 350,000 call options on the stock in a bet that shares would rise.

In addition, BlackRock, the world’s biggest asset manager, bought over 1 million shares last quarter. Goldman Sachs bought over 1.1 million shares, while Renaissance Technologies (the fabled fund that achieved an average annual return of 66% for decades) bought over 1.35 million.

As for management, Stephen Hensley invested $25 million just days after becoming CEO, while the company’s CFO bought another $5 million worth in shares. All told, the insider buying of UNH stock outweighed insider selling by a nearly 4:1 margin last quarter.

As the investing legend Peter Lynch observed, insiders can sell for many reasons unrelated to a stock. But they buy for only one: They think shares will go up.

Why UnitedHealth is a buy for retail investors, too

Berkshire officials haven’t commented publicly on their rationale for buying UnitedHealthcare, but it’s possible to speculate on their reasons.

Warren Buffett has called cash flow the most important metric in assessing a business’s potential. In a 2000 letter to shareholders, he wrote that dividend yield, the price-to-earnings ratio, book value, and even growth rates “have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business.”

Positive cash flow shows the company can cover its obligations, return money to shareholders, and potentially pursue growth and expansion. After floundering in 2024, UnitedHealth’s trailing-12-month operating cash flow has rebounded to $29 billion compared to $24.2 billion at the end of last year.

And if price-to-earnings, dividend yield, and growth rates are only background clues to cash flow, these metrics seem to bode well for UnitedHealth, too.

The company’s price-to-earnings ratio of 13.7 is cheap compared to the S&P 500,
with its average P/E ratio of around 26, while revenue growth of 13% year over year further fuels the bull case. Meanwhile, the company’s recent 5.2% dividend increase — its 15th consecutive annual payout hike — brings its yield to 2.8% as I write this, nearly triple the S&P 500 average.

For investors willing to take a long-term approach and be rewarded with rising income in the meantime, UnitedHealth is a buy.

It’s been a wild first half of the year for stocks in 2025, but finding the right companies for your portfolio is a very personal process. You need to consider the type of stocks you want to buy, the industries and sectors you gravitate toward, the amount of capital you have to invest, and your own personal risk tolerance.

If you have cash to invest in the stock market right now, and you’re looking for growth stocks that could make smart additions to the basket of businesses you own, there are names to be found across a range of industries, including healthcare. Here are two healthcare stocks that have at least doubled over the past 12 months but still look poised to deliver favorable returns for shareholders in the next three to five years. 

1. Hims & Hers Health

Hims & Hers Health (HIMS -5.41%) has witnessed a stock run-up of more than 200% over the trailing-12-month period. In contrast, the S&P 500 is up only about 18% in that same time frame. This boom in the company’s share price has occurred for a few reasons. Investors were particularly excited about the company’s ability to offer affordable, compounded GLP-1 drugs for weight loss amid shortages of branded versions, and that fueled significant revenue growth and share-price appreciation.

However, Hims & Hers can no longer mass-produce compounded drugs like semaglutide because the U.S. Food and Drug Administration declared the shortage resolved. While the company may still offer personalized doses where clinically applicable, its primary weight loss offerings are shifting to oral medications and liraglutide. In fact, Novo Nordisk, the maker of Wegovy (semaglutide for weight) and Ozempic (semaglutide for diabetes), ended its partnership with Hims & Hers, citing concerns over the latter company’s promotion and sales of compounded semaglutide.

While the company’s offerings may evolve in the coming months and years, it has other sources of growth to lean on besides the weight loss segment. Hims & Hers’ areas of focus include sexual health, hair loss, dermatology, mental health, and primary care. The platform also provides access to both over-the-counter and prescription treatments via online consultations with licensed healthcare professionals, and most of its revenue still comes from recurring subscriptions paid by healthcare consumers.

The recent acquisition of Zava, a European digital health platform, seems to have boosted investor confidence in the future of the business outside of its ambitions in the weight loss industry. The addition of Zava to Hims & Hers’ ecosystem will expand its reach into the U.K., Ireland, France, and Germany. Hims & Hers also plans to launch its platform in Canada in 2026.

Revenue grew by 110% year over year in the first quarter, and the company is building upon an improving track record of profitability. Hims & Hers also delivered free cash flow of about $50 million in Q1. This business has a lot of potential.

2. Doximity

Doximity (DOCS -2.45%) has seen shares pop by a bit more than 100% since this time one year ago. Doximity is known as the largest digital platform for U.S. medical professionals. It serves as a professional and social network for healthcare professionals including doctors, nurse practitioners, and physician assistants, and offers a wide variety of tools for communication, news, and career management.

Doximity provides a curated newsfeed with the latest medical news and research relevant to different specialties, and also offers tools for job searches, salary comparisons, and reputation management. The platform even provides telehealth solutions, enabling virtual patient visits and consultations.

The platform is free for healthcare professionals to use. This free access includes Doximity Dialer, a feature that allows secure communication with patients using a customized calling tool. The platform also offers free digital fax lines and access to Doximity Scribe, an AI-powered note-taking tool for verified clinicians. So, how does Doximity make money? From advertising and selling information. 

Doximity’s platform is a prime digital marketing and advertising tool for pharmaceutical manufacturers and healthcare systems (like hospitals). These entities pay Doximity to advertise and promote their products and services to targeted medical professionals. Health systems and medical recruiting firms also pay Doximity to access its database of medical professionals for recruitment and hiring purposes.

In Doximity’s fiscal 2025, which ended March 31, revenue increased 20% from the prior fiscal year to $570.4 million. The company reported net income of $223.2 million, up 51% year over year, with free cash flow spiking 50% to $266.7 million. This healthcare stock is really an advertising business at its core, and a profitable one at that. These factors could induce some investors to take another long look at this top stock and I think it has room to run.

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Doximity and Hims & Hers Health. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.