UnitedHealth Q4 Earnings Beat on Strong Optum Rx, Offers 2026 Outlook

UnitedHealth Group Incorporated UNH reported fourth-quarter 2025 adjusted earnings per share (EPS) of $2.11, which beat the Zacks Consensus Estimate of $2.09. However, the bottom line declined 69% year over year.

Revenues rose 12% year over year to $113.2 billion. The top line marginally missed the consensus mark.

The quarterly earnings were aided by growth in commercial fee-based membership and the strength witnessed in Optum Rx. However, elevated medical costs and declining risk-based membership partially offset the positives.

The proposed 0.09% increase for 2027 Medicare Advantage payments from CMS was below analyst expectations, which might dampen the effects of the earnings beat and the outlook for 2026.

For the full-year 2025, revenues increased almost 12% year over year to $447.6 billion, but marginally missed the consensus mark. Adjusted earnings of $16.35 per share declined from $27.66 a year ago, but beat the consensus estimate by 0.3%.

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote

Business Performance of UNH

UnitedHealth’s fourth-quarter premium of $88.8 billion increased from $76.5 billion a year ago but missed the consensus mark of $89 billion.

UNH’s adjusted medical care ratio (MCR) was 91.5% in the fourth quarter, which deteriorated 640 bps from the year-ago period. The metric was lower than the Zacks Consensus Estimate of 92.2%. MCR witnessed an increase due to reductions in Medicare funding and rising medical cost trend, which exceeded the pricing trend. Medical costs of $82 billion rose from $67 billion a year ago.

Fourth-quarter total operating costs of $112.8 billion escalated 21.3% year over year due to higher medical costs and operating costs. The figure came higher than our model estimate of $109.4 billion. The fourth-quarter 2025 adjusted operating cost ratio deteriorated to 13.5% from 11.9% a year ago.

UnitedHealth’s adjusted operating earnings declined 62.1% year over year to $3.1 billion in the fourth quarter.

UNH’s Business Platforms

Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 17.5% year over year to $87.1 billion in the fourth quarter. The metric missed the Zacks Consensus Estimate of $87.3 billion. The UnitedHealthcare business catered to 49.8 million people as of Dec. 31, 2025, which grew 0.8% year over year. However, the figure missed the Zacks Consensus Estimate of 50.4 million.

Adjusted earnings from operations amounted to $472 million, down from $3 billion a year ago. The adjusted operating margin decreased to 0.5% from 4.1% a year ago.

Revenues in the Optum business line were $70.3 billion, which rose from $65.1 billion a year ago, due to strong contributions from Optum Rx. The figure surpassed the consensus mark of $67.6 billion. Optum’s adjusted earnings from operations declined to $2.7 billion from $5.2 billion a year ago. The adjusted operating margin of 3.8% decreased from 8%.

UNH’s Financial Position (As of Dec. 31, 2025)

UnitedHealth exited the fourth quarter with cash and short-term investments of $28.1 billion, which fell from the 2024-end level of $29.1 billion. Total assets of $309.6 billion increased from the $298.3 billion figure at 2024-end.

Long-term debt, less of current maturities, amounted to $72.32 billion, marginally down from the $72.36 billion figure as of Dec. 31, 2024. Short-term borrowings and the current maturities of long-term debt were $6.1 billion.

Total equity of $100.1 billion advanced from the 2024-end level of $98.3 billion.

UnitedHealth generated operating cash flows of $19.7 billion in 2025, which declined from the prior-year figure of $24.2 billion. For the full-year 2025, it made share repurchases worth $5.5 billion and paid dividends worth $7.9 billion.

UNH’s 2026 Outlook

Management projects revenues for 2026 above $439 billion, which is below the 2025 level due to planned right-sizing across operations. Adjusted EPS is expected to be at least $17.75 for 2026, indicating improving margins. It is higher than the Zacks Consensus Estimate of $17.61 now. Net margin is expected at around 3.6%, up from 2.7% in 2025.

It expects MCR to be 88.8% (± 50 bps) in 2026, down from 89.1% in 2025, while the operating cost ratio is likely to be 12.8% (± 50 bps). Tax rate is expected to be around 19.25%.

Operating cash flows are estimated to be $18 billion, down from the 2025 level. It expects to make repurchases of $2.5 billion and pay dividends worth $8 billion in 2026. Capex is estimated at $3.8 billion for the year.

Furthermore, it expects medical memberships to be within 46.945 – 47.495 million in 2026, with significant declines in commercial risk, Medicare Advantage and Medicaid heads.

Zacks Rank & Key Picks

UnitedHealth currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Medical sector are Enhabit, Inc. EHAB, Universal Health Services, Inc. UHS and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Enhabit’s 2025 earnings indicates more than 157% year-over-year surge. EHAB beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 23.6%. The consensus mark for Enhabit’s 2025 revenues indicates 2.3% year-over-year growth.

The Zacks Consensus Estimate for Universal Health’s 2025 earnings indicates a 31.3% year-over-year increase. UHS beat earnings estimates in each of the trailing four quarters, with an average surprise of 15.2%. The consensus mark for Universal Health’s revenues implies 9.7% growth from the year-ago period.

The Zacks Consensus Estimate for ResMed’s current-year earnings implies a 13.7% improvement from the year-ago reported figure. RMD beat earnings estimates in each of the trailing four quarters, with an average surprise of 3%. The consensus mark for ResMed’s current-year revenues is pegged at $5.58 billion, which indicates an 8.4% year-over-year increase.

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This article originally published on Zacks Investment Research (zacks.com).

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