UnitedHealth Group raises 2026 forecast, profits to hit $5.48 billion as health care costs drop
UnitedHealth Group reports second-quarter net profit of $5.48 billion, benefiting from lower medical costs and strong Optum performance Health services business. The company also raised its profit forecast for 2026, saying it expects better financial results for the rest of the year as it continues to control medical expenses.
Investors welcomed the results. According to Reuters, UnitedHealth shares rose nearly 5% in pre-market trading after the earnings report was released. On an adjusted basis, UnitedHealth earned $6.38 per share in the second quarter. That was well above analysts’ average estimate of $4.90 per share, according to LSEG data.
Raise 2026 profit forecast
UnitedHealth currently expects 2026 earnings per share to be in a range of $19.50 to $20. Previously, the company had expected earnings of at least $17.75 per share. Wall Street analysts had expected earnings of about $18.47 per share, so the company’s new forecast is higher than expected.
The company also reported strong second-quarter profit growth. Net profit rose to $5.48 billion (or $6.04 per share) from $3.4 billion (or $3.74 per share) in the same period last year. Total revenue rose slightly to $112.03 billion, up from $111.6 billion a year ago. This growth was mainly driven by Optum Health Services Business and some UnitedHealthcare insurance plans. UnitedHealth’s revenue also topped analysts’ expectations of about $111 billion.
Chief Financial Officer Wayne DeVeydt said the company also saves money by better controlling medical costs in its Medicare Advantage plans. He added that higher government payments for the Medicaid program, which covers low-income Americans, also supported second-quarter earnings. “These results do not reflect a bending of the trend or that it is under control, but rather that we are starting to work to bring down the already high numbers,” de Wit said, according to Reuters.
Medical costs fell in second quarter
The company spends a smaller percentage of premiums on health care. Its medical expense ratio was 86.7%, down from 89.4% a year ago. The medical expense ratio of 86.7% was also better than analysts’ expectations of 88.47%, LSEG data showed. Lower medical cost ratios are good for health insurance companies because it means they spend less of their premium revenue on patient care.
UnitedHealth said the lower medical cost ratio was driven by better pricing, changes in insurance plans, improved customer mix and stronger medical cost management. The company is still dealing with high medical costs. DeWitt said the latest results did not mean the problem was over, but showed that the company’s efforts to cut expenses were working, Reuters reported.
Health plan membership declines
The company’s insurance business, UnitedHealthcare, reported revenue of $86 billion, nearly unchanged from $86.1 billion in the same period last year. DeVeydt said the company kept its overall revenue forecast for 2026 unchanged at $439 billion. According to Reuters, higher insurance costs have led some customers to abandon the company’s health plans, especially those who purchased coverage through the Obamacare marketplace.
DeWitt said the end of additional pandemic-era government subsidies made Obamacare plans more expensive for many customers, leading to declining enrollment. DeWitt said UnitedHealthcare expects about 500,000 people to drop out of Obamacare plans in 2026, Reuters reported.
Overall health plan membership also declined. UnitedHealth covered about 48.5 million people in the second quarter, compared with 49.8 million people at the end of 2025. Membership is also down by approximately 525,000 members compared with the end of the first quarter of 2026. The company said many of those member losses were because it stopped offering coverage in less profitable markets, including some Obamacare plans and Medicare Advantage areas.
Optum business shows strong growth
UnitedHealth has reduced some Medicare Advantage services for seniors as part of a strategy to improve profitability. The company’s health services business, Optum, showed strong improvement during the quarter. According to Reuters, operating income increased 29% year-on-year to $4 billion. The improvement was driven by better performance from technology business Optum Insight and improved access to patient care at Optum Health.
That marked an improvement after the first quarter, when Optum’s operating income fell 15% to $3.3 billion. New artificial intelligence tools launched this year reduce paperwork, allowing doctors to spend more time treating patients, DeWitt said. “We said with Optum Health this would be a multi-year journey back to historic growth levels and margins,” DeVeydt said, according to Reuters. “I would say we’re ahead of schedule in year one,” he added. DeVeydt said he expects Optum’s revenue growth to fully resume in 2028.
CEO continues push for company’s turnaround
Chief Executive Stephen Hemsley returned to lead UnitedHealth last year after the company faced several major challenges. Those challenges include missing financial targets, a nationwide ransomware attack and the killing of an executive outside an investor meeting. Upon his return, Hemsley reshaped the company. He has replaced about half of his senior leadership team, exited some insurance products and committed $1.5 billion to investments in artificial intelligence.
Reuters said the company had previously warned that Optum could face about $11 billion in regulatory and cost-related pressures over three years, making the latest improvement an important step in its recovery. Forbes notes that the nation’s health care cost ratio health insurance industry has been rising as more patients seek treatment after delays in care during the pandemic.
UnitedHealth’s medical expense ratio has now stayed below 90% for two consecutive quarters, which is considered a healthier level for the insurance company. Forbes also said UnitedHealth’s medical expense ratio of 86.7% was better than the 89.7% benefit expense ratio reported this week by rival Elevance Health. Health insurance companies such as UnitedHealthcare, Aetna, Humana and Elevance Health have been working to reduce rising medical costs, especially for seniors enrolled in Medicare Advantage plans.
Overall, UnitedHealth’s strong profit growth, lower health care costs, improving Optum results, and higher 2026 earnings forecasts indicate that the company is making progress in improving its financial performance
