UnitedHealth Group (NYSE:UNH) increased its full-year 2026 earnings guidance on Tuesday after reporting third-quarter adjusted profit above market expectations, supported by tighter medical cost controls and improved operating performance across its insurance and Optum businesses.
Shares of the US healthcare group rose 4.5% to $395.50 in pre-market trading following the results.
UnitedHealth reported adjusted earnings of $4.69 per share for the third quarter, compared with $2.92 in the same period last year. The result exceeded the average analyst forecast of $4.14 per share, according to LSEG data.
The company now expects adjusted earnings of at least $20.50 per share for 2026, compared with its previous guidance of approximately $19.50 to $20 per share.
Analysts had been forecasting full-year earnings of $19.86 per share before the announcement.
The revised outlook reflects progress in UnitedHealth’s efforts to restore profitability following a period of operational difficulties, rising healthcare expenses and weaker-than-expected financial performance.
A significant contributor to the improved results was a reduction in the proportion of insurance premiums spent on medical care.
UnitedHealth reported a third-quarter medical cost ratio of 88.4%, below analyst expectations and down from 89.90% in the corresponding period of 2025.
The medical cost ratio measures the percentage of premium revenue used to pay for healthcare services. A lower ratio generally indicates that an insurer is retaining a greater share of premiums before accounting for other operating expenses.
UnitedHealth attributed the improvement to changes in insurance plan design, revised product pricing and tighter management of medical spending.
The company has also withdrawn from certain insurance products during 2026 as part of efforts to improve profitability.
These measures followed a challenging period in which UnitedHealth missed financial expectations and introduced changes to its senior management team.
Despite the improvement in margins, revenue from the UnitedHealthcare insurance division declined to $86.3 billion from $87.1 billion a year earlier.
However, operating earnings and profit margins increased as the benefits of pricing adjustments, changes to insurance coverage and tighter medical and administrative cost controls offset the decline in revenue.
UnitedHealth also reported reductions in membership across several insurance categories.
In its employer-sponsored health insurance business, membership fell by 165,000 people due to customer attrition.
A further 85,000 members left the company’s Medicaid plans following changes to eligibility requirements.
Medicaid provides healthcare coverage for eligible low-income Americans, with UnitedHealthcare administering plans on behalf of state governments.
The company also reported that 935,000 members had exited its Medicare Advantage business since the end of 2025.
Medicare Advantage plans provide health insurance coverage for eligible older adults and people with certain disabilities.
The membership reductions reflect changes in UnitedHealth’s insurance portfolio as the company adjusts its product offerings and seeks to improve financial performance.
While lower enrolment can reduce premium revenue, the company has focused on improving the profitability of its remaining business through pricing and cost-management measures.
UnitedHealth’s Optum division was another important contributor to the improvement in third-quarter earnings.
Group operating income increased to $6.6 billion from $4.3 billion in the same quarter last year, largely reflecting stronger performance at Optum Health, the company’s clinical care business.
UnitedHealth said investments in technology had helped reduce the overall cost of delivering medical services.
The company also benefited from decisions to discontinue less favourable contracts with certain health plans, which had previously weighed on Optum’s profitability.
Those contracts had contributed to weaker earnings during the first quarter.
Optum has faced significant operational and regulatory pressures in recent years. UnitedHealth previously indicated that regulatory issues and rising costs could have a cumulative financial impact of approximately $11 billion on the business over three years.
The latest quarterly results suggest that changes to the unit’s operations and contract portfolio are beginning to support improved margins.
Alongside Optum Health, UnitedHealth operates healthcare technology and pharmacy-related businesses, including pharmacy benefit management services.
UnitedHealth reported third-quarter revenue of $112.694 billion, compared with $113.161 billion in the corresponding period last year.
Although revenue declined slightly on an annual basis, it exceeded the approximately $111 billion expected by analysts surveyed by LSEG.
The result demonstrated that UnitedHealth was able to improve profitability despite reporting lower overall revenue.
The combination of stronger operating income, improved insurance margins and reduced medical costs supported the company’s decision to increase its full-year earnings forecast.
UnitedHealth has spent the past two years addressing a series of operational and financial setbacks.
The company was affected by a major cyberattack on the US healthcare system, which disrupted operations and created significant financial and administrative challenges.
It subsequently missed financial targets and withdrew its earnings outlook during a period of elevated medical expenses and uncertainty surrounding its businesses.
The group was also affected by the killing of a senior executive in New York ahead of a company investor event nearly two years ago.
Since then, UnitedHealth has introduced management changes, revised insurance pricing, exited less profitable products and contracts, and invested in technology intended to improve operating efficiency.
The third-quarter results indicate progress in those efforts, with earnings growth supported by both UnitedHealthcare and Optum.
However, membership declines, healthcare cost trends and regulatory pressures remain important considerations for the company’s future performance.
The increased 2026 profit forecast signals management’s expectation that the operational improvements achieved during the year will continue to support earnings through the remainder of the period.
UnitedHealth Group stock price
| 37 min | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 1 hour | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 2 hours | |
| 3 hours | |
| 3 hours | |
| 3 hours | |
| 4 hours |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, alerts, and much more.
Learn more about Finviz Elite