UnitedHealth beats Q3 expectations, hikes 2026 guidance

Fifteen months after CEO Stephen Hemsley returned to lead UnitedHealth Group out of the financial darkness, the insurer is reaping the results of the discipline he imposed.

UHG raised its 2026 adjusted earnings forecast for the third time this year Tuesday after reporting stronger-than-expected third-quarter results. Meeting with Wall Street analysts, the executive team said efforts to rein in medical costs and improve performance across its insurance and Optum businesses are gaining traction.

“We're steadily and methodically improving performance broadly across the portfolio,” said Chief Financial Officer Wayne DeVeydt. “We are positioned to finish 2026 strongly, and we remain focused on consistently delivering our 13 to 16 percent long-term growth target.”

The company now expects adjusted earnings of at least $20.50 per share for the year, up from its previous forecast of $19.50 to $20.

UnitedHealth’s medical care ratio — the share of premium revenue spent on medical care — improved to 88.4% from 89.9% a year earlier, reflecting pricing discipline, benefit changes and efforts to manage care costs.

Hemsley said the company’s performance reflects actions taken throughout 2026 and positions it for sustainable growth in 2027 and beyond.

The improved results come as UnitedHealth works to recover from a period of elevated medical costs and operational challenges. Executives said they are simplifying operations, investing in technology and artificial intelligence, and sharpening the company’s focus on value-based care.

Medicare Advantage and Medicaid

UnitedHealthcare expects its 2026 Medicare Advantage margins to finish near the upper end of its 2% to 4% target range, executives said. Recovery efforts have focused on medical cost management, benefit design and more durable product offerings.

For 2027, the insurer plans to prioritize high-value health maintenance organization plans, chronic condition special needs plans and dual eligible special needs plans for people enrolled in both Medicare and Medicaid.

More than 94% of Medicare-eligible Americans will have access to a UnitedHealthcare Medicare plan next year, the company said. About 90% will have access to a Medicare Advantage plan with a zero-dollar premium option.

“With adequate funding, we believe Medicare Advantage will continue to be the choice of American seniors, particularly those who are disadvantaged and have chronic care challenges as they seek better value and modern care,” said Tim Noel, CEO of UnitedHealthcare.

Executives said they see opportunities for growth in those markets but declined to provide specific 2027 membership guidance, which they expect to discuss later this year.

Medicaid performance also improved during the third quarter. UnitedHealth expects its core Medicaid margins for 2026 to be moderately better than negative 1%, with executives citing improvements in care management, provider networks, member engagement and efforts to identify fraud, waste and abuse.

The company expects some additional margin improvement next year and said it is working with states to address gaps between reimbursement rates and medical costs. Executives said they see an opportunity to return Medicaid margins to targeted levels by the end of 2028.

High commercial costs

Commercial medical costs remain a concern. UnitedHealth said trends are stabilizing but remain elevated, with costs running above its initial expectations of 11%. Specialty drugs, higher use of acute care and disputes under the No Surprises Act’s independent dispute resolution process are contributing to the pressure.

Executives criticized what they described as abuse of the dispute process by some clinician groups and third-party organizations, saying arbitration awards can add billions of dollars in costs for employers, consumers and the health system.

“We will continue working with policymakers and regulators to ensure the law functions as intended, and that healthcare dollars are directed towards appropriate patient care rather than significantly inflated market arbitration awards and volumes, along with unnecessary administrative expense,” Noel said.

Expanding AI use

Executives also pointed to improving performance at Optum, UnitedHealth’s health services and technology business.

Optum Health’s results benefited from a renewed focus on value-based care, clinical programs and operational improvements. Online self-scheduling increased 27% from a year earlier, while home health visits rose 10%. The company also reported growing participation in programs that place behavioral health specialists in primary care practices.

The business serves about 20 million patients, including roughly 4 million in fully accountable care arrangements. Executives said opportunities remain to expand those arrangements and grow services such as home health, hospice and surgery centers.

Optum Insight is investing in artificial intelligence products and platforms. Executives cited Optum Integrity One, a product designed to automate claims scoring in the revenue cycle, which has grown from two clients at the end of 2025 to 15 implemented clients, with another 24 in the implementation process.

UnitedHealth also plans to expand AI tools across its broader operations. AI-assisted chart summarization is now available to more than 40% of its employed clinicians and has reduced chart review time by 33%, Hemsley said.

The company expects to complete previously announced prior authorization reforms by the end of 2026. The changes are intended to reduce total prior authorizations by 30%, including a two-thirds reduction for patients younger than 18.

Quarterly Highlights

• UnitedHealthcare served 48.3 million consumers.
• Optum cared for over 120 million patients and consumers and drove revenues of $66.9 billion and earnings of $3.7 billion.
• The 88.4% medical care ratio reflected "improved medical cost management, benefit and pricing alignment and care delivery enhancements." It also included $610 million of net favorable prior period reserve development.
• Days claims payable were 47.0 compared to 47.0 in the second quarter 2026 and 46.2 in the third quarter 2025.

By The Numbers

• Total Revenue: $112.7 billion ($113.2 billion in Q3 2025)
• Operational earnings: $6.6 billion ($4.3 billion in Q3 2025)
• Earnings Per Share: $4.69 per share ($2.92 in Q3 2025)
• Share Repurchases: $1 billion in Q3 2026
• Dividend Declared: $2.1 billion in Q3 2026
• Stock Price Movement: Shares down 1% to $374.49

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.