UnitedHealth Group raised its full-year adjusted profit-per-share guidance for 2026 on Thursday after reporting second-quarter results that reflected tighter management of medical costs and an operating income recovery at its Optum health services division. The announcement pushed shares higher in pre-market trading.
Quarterly performance and updated guidance
On an adjusted basis, UnitedHealth posted second-quarter earnings of $6.38 per share, ahead of the LSEG consensus estimate of $4.90 per share. Following the results, the company increased its 2026 adjusted earnings-per-share forecast to a range of $19.50 to $20.00, up from its prior commitment of at least $17.75. By comparison, analysts polled by LSEG expected $18.47 per share for 2026.
UnitedHealth maintained its 2026 revenue outlook at $439 billion.
How management described the drivers
Chief Financial Officer Wayne DeVeydt attributed the stronger-than-expected second-quarter performance to cost controls in the Medicare business and higher payments for Medicaid plans covering low-income Americans. DeVeydt emphasized that the company is attempting to reduce an already elevated level of medical costs rather than signaling that the underlying trend has definitively turned.
DeVeydt also noted that changes in insurance plan design and new pricing on products contributed to the improvement in the company’s medical cost ratio.
Medical cost ratio, revenue details and membership trends
UnitedHealth reported a medical cost ratio of 86.70% for the quarter - the share of premiums spent on medical care - which was better than the analyst estimate of 88.47% and improved from 89.4% a year earlier. The health insurance division, UnitedHealthcare, generated second-quarter revenue of $86 billion, essentially flat with the $86.1 billion reported in the same period last year.
Consolidated revenue rose to $112 billion from $111.6 billion year-over-year, exceeding the roughly $111 billion analysts had expected, according to LSEG data.
DeVeydt said that higher insurance costs have prompted membership declines in certain parts of the business, particularly among consumers buying plans through the Obamacare marketplace after pandemic-era subsidies ended. He expects about 500,000 people to disenroll from marketplace plans in 2026.
Optum’s rebound and AI investment
Optum recorded a significant year-over-year recovery in the quarter, with operating income rising 29% to $4 billion. Management attributed the improvement to stronger performance at Optum Insight - its technology segment - and better access to care within the clinical operations of Optum Health. Optum had been a drag on earnings in the prior quarter when operating income fell 15% year-over-year to $3.3 billion.
UnitedHealth has committed $1.5 billion to invest in artificial intelligence, and the company said AI tools introduced this year are reducing administrative burdens and allowing Optum Health clinicians to devote more time to patient care. DeVeydt described rebuilding Optum Health as a multi-year effort to restore historical growth and margins and said he expects revenue growth to fully return in 2028, adding that the company is ahead of schedule in year one of that plan.
Strategic changes and challenges
Since returning to the top role last year, CEO Stephen Hemsley refocused the organization, refreshed about half of the company’s senior leadership, exited some insurance products and directed capital toward AI. The company also scaled back some Medicare Advantage offerings and had Optum exit less favorable coordinated care contracts.
UnitedHealth disclosed earlier challenges at Optum that it said represented an $11 billion impact over three years. Management has taken steps this year to curb costs and reset the business as part of its multi-year plan.
Additional context and notable events: The company’s recent history includes a nationally disruptive ransomware attack and the death of a top executive outside an investor meeting; Hemsley’s return followed a period in which the company missed financial estimates.
Overall, the quarterly results and updated earnings guidance reflect UnitedHealth’s focus on medical cost containment, operational improvement at Optum and targeted investments in technology to drive efficiencies.