UnitedHealth tops estimates and raises 2026 profit outlook as medical costs stay high

UnitedHealth Group reported third-quarter results on 13 October, according to CNBC. The company posted net income of $4.11 billion, or $4.56 per share, compared with $2.35 billion, or $2.59 per share, in the same period a year earlier. Excluding items including business divestitures, restructuring and the expected reduction of reserves for unprofitable contracts, UnitedHealth earned $4.69 per share, CNBC reported.

Revenue fell to $112.69 billion from $113.16 billion in the prior-year quarter, according to CNBC. The company's insurer, UnitedHealthcare, and its Optum healthcare unit both topped analysts' operating earnings estimates for the quarter, according to StreetAccount. UnitedHealth said it expects fiscal 2026 adjusted earnings of at least $20.50 per share, up from a previous outlook of $19.50 to $20 per share.

UnitedHealth's medical cost ratio — a measure of total medical expenses paid relative to premiums collected — was 88.4% for the third quarter, CNBC reported. Analysts had expected a ratio of 89.9%, according to StreetAccount. CNBC reported that a lower ratio typically indicates the company collected more in premiums than it paid out in benefits, resulting in higher profitability.

CFO Wayne DeVeydt told CNBC that medical costs in the quarter "continue to be elevated versus historical norms." He said the independent dispute resolution process under the No Surprises Act is adding at least 100 basis points, or 1 percentage point, to total medical costs. DeVeydt said those changes are driving up the company's claims costs, which can ultimately be passed on to consumers through higher premiums, and that costs for inpatient services and pharmacy, particularly specialty pharmacy drugs for cancer and rare diseases, remain elevated.

DeVeydt said in an interview that the company continues to execute on the financial aspects of its business and is "investing heavily in value-based care." CNBC reported that UnitedHealth is working to stabilize margins by shrinking membership, exiting unprofitable contracts and increasing investments in artificial intelligence and value-based care, which tie doctor and facility compensation to patient health outcomes, quality of care and cost effectiveness rather than the volume of medical services provided.