TLDR
- UnitedHealth delivered Q4 adjusted earnings of $2.11 per share versus $2.10 expected
- Fourth-quarter revenue of $113.2 billion came in below the $113.82 billion estimate
- 2026 revenue forecast exceeding $439 billion marks first annual decline in a decade
- The insurer expects to lose over 3 million members in 2026 as part of restructuring
- Projected medical benefit ratio of 88.8% for 2026 improves from 89.1% in 2025
UnitedHealth Group reported fourth-quarter earnings Tuesday that beat analyst estimates. But the celebration was short-lived. Revenue guidance for 2026 spooked investors and sent shares tumbling.
The company posted adjusted earnings of $2.11 per share. That edged past the $2.10 consensus forecast. Revenue hit $113.2 billion but trailed expectations of $113.82 billion.
The bigger issue is what’s ahead. UnitedHealth forecasts 2026 revenue topping $439 billion. That represents a 2% year-over-year decline. It’s the first time the company has projected falling revenue in ten years.
UnitedHealth Group Incorporated, UNH
Analysts were expecting $454.6 billion in sales. The guidance miss is substantial. CFO Wayne DeVeydt acknowledged the historic nature of the forecast.
Three main factors explain the revenue drop. First, UnitedHealth divested several businesses in the fourth quarter. More sales are planned for 2026, including operations in the UK and South America.
Second, the company expects membership to fall by more than 3 million people this year. UnitedHealth describes this as “right-sizing across the enterprise.” The move is part of a broader turnaround strategy focused on profitability over growth.
Third, Medicare’s V28 coding system completes its transition in 2026. The new payment structure will reduce UnitedHealth’s revenue by $6 billion. The insurance arm takes a $2 billion hit while Optum absorbs $4 billion.
Medical Costs Trend in Right Direction
One bright spot emerged from the report. The medical benefit ratio is heading lower. UnitedHealth expects this key metric at 88.8% for 2026, give or take 50 basis points.
That’s an improvement from the 89.1% ratio posted in 2025. The ratio measures medical expenses paid out compared to premiums collected. Lower is better for profits.
Medical costs from Medicare Advantage patients have pressured margins for two years. Seniors returned to hospitals for procedures delayed during the pandemic. Hip replacements and joint surgeries drove expenses higher.
DeVeydt said fourth-quarter medical costs remained “elevated and high but not growing beyond expectations.” The company appears to be getting costs under control.
Weak Medicare Rates Pummel Shares
Monday delivered bad news from Washington. The Centers for Medicare and Medicaid Services proposed just a 0.09% payment increase for Medicare Advantage plans in 2027.
The proposal crushed health insurance stocks. UnitedHealth fell more than 12% in premarket trading Tuesday. Competitors Humana and CVS Health also dropped sharply.
Medicare Advantage covers over half of Medicare beneficiaries. Government payment rates determine what insurers can charge for premiums and benefits. Minimal rate increases squeeze profitability.
UnitedHealth has already scaled back Medicare Advantage offerings. The company is exiting unprofitable markets and raising prices elsewhere.
The government typically finalizes Medicare Advantage rates in early April. If the current proposal holds, it would add just $700 million in payments across all plans in 2027. That’s far below what insurers wanted.
Despite revenue challenges, UnitedHealth projects 2026 adjusted profit per share above $17.75. Analysts expected $17.74 based on LSEG data. The earnings forecast slightly topped estimates.
CEO Stephen Hemsley returned in May to steer the turnaround. The company has weathered multiple crises including an executive’s murder, federal probes, and public anger over insurance denials.
DeVeydt said the company “righted the ship” by shedding international operations and focusing on domestic business. UnitedHealth has strengthened its balance sheet to position for long-term growth.
