UnitedHealth Plunge Drags Healthcare ETFs to New Lows

Shares of UnitedHealth Group Inc. (UNH), the largest U.S. health insurer and one of the biggest names in healthcare overall, continued their steep slide on Thursday—this time on news of a criminal investigation.

The Wall Street Journal reported that the Department of Justice is investigating UnitedHealth for potential Medicare fraud, sending the company’s stock tumbling nearly 19%. That adds to what has been a brutal month for shareholders. Since peaking on April 11, the stock has plunged 58%, erasing more than $320 billion in market capitalization.

UNH Weighs on XLV

The collapse of such a heavyweight is having ripple effects across the entire healthcare sector. The Health Care Select Sector SPDR Fund (XLV) fell 0.6% on Thursday, marking its seventh decline in the past nine trading days.

Healthcare is now the worst-performing stock market sector of 2025 by far. XLV is down 6.6% year to date, compared to a modest 0.3% gain for the S&P 500, as measured by the SPDR S&P 500 ETF Trust (SPY). While SPY has climbed 18% from its April trade-war–induced low, XLV has fallen another 4%, hitting its lowest level since November 2023.

XLV vs. SPY YTD Through May 14—Source: FactSet data

Much of that underperformance can be traced directly to UnitedHealth’s collapse. The stock has fallen more than 50% since the start of the year and currently represents 6% of XLV’s portfolio, making it the ETF’s fourth-largest holding. 

According to etf.com's ETF Stock Holdings tool, 391 U.S.-listed ETFs hold shares of UnitedHealth in some capacity, spreading the pain far beyond just XLV.

The stock’s sharp drop follows weeks of bad news for UnitedHealth, including rising medical costs and the sudden resignation of its CEO. Now, the specter of a federal investigation has added a new layer of uncertainty to a stock that has already lost the market’s confidence.

For healthcare ETF investors, the fallout has been swift and widespread.