A month has gone by since the last earnings report for UnitedHealth Group (UNH). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is UnitedHealth due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
UnitedHealth Q4 Earnings Beat on Strong Optum Rx, Offers 2026 Outlook
UnitedHealth Group 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%.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.27% due to these changes.
VGM Scores
Currently, UnitedHealth has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock has a score of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, UnitedHealth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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UnitedHealth Group Incorporated (UNH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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