UnitedHealth Group announced Thursday that it is raising its profit outlook for 2026, crediting tighter controls on medical spending and a rebound in operating income at its Optum health services arm.
The news sent shares of the healthcare giant climbing nearly 5% in pre-market trading.
Chief Financial Officer Wayne DeVeydt credited cost discipline within the Medicare insurance business and higher payment rates for Medicaid plans serving lower-income Americans as key factors behind the strong second-quarter showing.
On an adjusted basis, the company posted earnings of $6.38 per share for the quarter — well above the average analyst projection of $4.90, based on data from LSEG.
“These results are not a reflection of a trend bending or coming under control, but rather our efforts to start pushing down what is already an elevated number,” DeVeydt said.
UnitedHealth now projects 2026 adjusted earnings per share in the range of $19.50 to $20.00, a significant jump from its earlier guidance of at least $17.75. Analysts had been expecting $18.47 per share for 2026, according to LSEG figures.
CEO Stephen Hemsley took back the reins of the company last year following a period of missed financial targets, a major ransomware attack that disrupted health services nationwide, and the fatal shooting of a top executive outside the company’s investor meeting.
Since returning, Hemsley has restructured the organization, replaced roughly half of its senior leadership team, stepped away from certain insurance products, and pledged $1.5 billion toward artificial intelligence investments.
Keeping Medical Costs in Check
UnitedHealth’s second-quarter medical cost ratio — which measures what share of premium revenue goes toward paying for care — came in at 86.70%. That was considerably better than the analyst forecast of 88.47% and an improvement from 89.4% in the same quarter a year ago.
The company’s insurance division, UnitedHealthcare, reported second-quarter revenue of $86 billion, nearly flat with $86.1 billion in the prior-year period. Total company revenue climbed to $112 billion from $111.6 billion, topping analyst expectations of around $111 billion, per LSEG.
UnitedHealth attributed the improved cost ratio to changes in how insurance plans are structured and updated pricing on its products.
DeVeydt noted that rising insurance costs contributed to a drop in membership, particularly among people who had been enrolled in marketplace plans through the Affordable Care Act — commonly known as Obamacare — as extra subsidies from the pandemic era expired. He said UnitedHealthcare anticipates 500,000 people will leave its Obamacare plans in 2026.
The company left its full-year 2026 revenue forecast unchanged at $439 billion.
Optum Bounces Back
The Optum health services segment delivered a strong turnaround, with second-quarter operating income rising 29% year-over-year to $4 billion. The gains were driven by better performance in the Optum Insight technology segment and improved patient access within its clinical operations.
That marks a notable recovery from the first quarter, when Optum’s operating income fell 15% compared to the prior year, landing at $3.3 billion.
DeVeydt said artificial intelligence tools introduced this year have helped reduce administrative tasks and freed up clinicians to spend more time with patients.
“We said, with Optum Health, this would be a multi-year journey to return to historical growth levels and margins,” DeVeydt said. “I would say we are ahead of schedule in year one.” He expects full revenue growth to return by 2028.
Earlier this year, UnitedHealth scaled back its Medicare Advantage offerings for older adults, and Optum exited contracts for coordinated care plans that were not financially favorable. The company had previously disclosed that Optum faced a combination of regulatory hurdles and cost pressures amounting to an $11 billion setback for the unit over three years.
