Stock Markets January 27, 2026

UnitedHealth Forecasts 2026 EPS Slightly Above Street as Cost Controls Show Early Impact

Insurer projects modest outperformance but warns of persistent pressure in government programs amid proposed Medicare Advantage rate lift that's far below expectations

By Caleb Monroe UNH HUM CVS
UnitedHealth Forecasts 2026 EPS Slightly Above Street as Cost Controls Show Early Impact
UNH HUM CVS

UnitedHealth said it expects adjusted 2026 earnings per share just above analysts' consensus, signaling initial benefits from recent medical cost-control measures. The company nevertheless flagged ongoing challenges in Medicaid and government-backed plans and noted that a proposed minimal Medicare Advantage rate increase weighed on insurer stocks.

Key Points

  • UnitedHealth forecasts adjusted 2026 EPS above analysts average estimate at greater than $17.75, versus the LSEG consensus of $17.74.
  • Medicaid business recovery is expected to be difficult due to payment-rate and cost mismatches; UnitedHealth has also reduced some Medicare Advantage offerings.
  • A proposed 0.09% average increase in Medicare Advantage payments, far below expectations, contributed to an over 8% premarket drop in shares of major insurers.

UnitedHealth on Tuesday said it expects adjusted profit per share for 2026 to come in just above Wall Streets consensus, a sign that the company's recent efforts to rein in medical costs are beginning to produce tangible results.

The company forecast annual profit per share of greater than $17.75, compared with analysts average estimate of $17.74, based on data compiled by LSEG.

Management context and recent leadership changes

The announcement comes as Stephen Hemsley, who returned to the chief executive role in May, has been focused on restoring confidence among investors and consumers. Hemsleys return followed a difficult stretch for the insurance giant that included the murder of a top executive, a surge in medical costs, a federal probe and broad public dissatisfaction with insurance industry practices.

Headwinds within government programs

UnitedHealth signaled a continued, challenging recovery in its Medicaid business, attributing weakness to a mismatch between payment rates and the costs of medical services for lower-income Americans. The company has also scaled back some Medicare Advantage offerings for older adults, reflecting pressure across government-backed plans.

The insurer said it has faced elevated costs in government programs for more than two years, driven by higher utilization of behavioral health services, specialty drugs and home-health services.

Medicare Advantage rate proposal and market reaction

The U.S. government on Monday proposed an average increase of 0.09% in payments to private insurers for Medicare Advantage plans next year, a move far below Wall Street expectations. If the proposal stands, the rate change would translate into more than $700 million in payments to Medicare Advantage plans in 2027, the administration estimated.

That proposed rate lift sent shares of several leading insurers - including Humana, CVS Health and UnitedHealth - down more than 8% in premarket trading.

CMS typically finalizes Medicare Advantage rates in early April.

Recent financial metrics

For the year, UnitedHealth reported an adjusted medical care ratio - the share of premiums paid out for medical care - of 88.9%, up from 85.5% in 2024. Analysts on average had expected a ratio of 89.1% for 2025.

The company said the increase in the medical care ratio was driven by reduced Medicare funding, provisions from the Inflation Reduction Act and accelerating medical cost trends.

On an adjusted basis, UnitedHealth posted fourth-quarter earnings of $2.11 per share, narrowly outpacing analysts consensus of $2.10, according to LSEG data.


The company appears to be making incremental progress on cost containment while continuing to navigate persistent cost pressures and regulatory uncertainty in government-sponsored plans.

Risks

  • Medicaid recovery uncertainty - the mismatch between payment rates and medical service costs could continue to pressure the Medicaid segment and related insurer margins (affects health insurance and government healthcare funding sectors).
  • Regulatory and funding changes - proposed low Medicare Advantage rate increases and reductions in Medicare funding could constrain revenue for private insurers managing government plans (impacts insurers and Medicare Advantage market).
  • Rising medical utilization and costs - sustained higher use of behavioral health services, specialty drugs and home-health services may keep medical care ratios elevated and weigh on profitability (impacts managed care unit economics and payer margins).

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