TLDR
- UnitedHealth posted Q4 adjusted earnings of $2.11 per share, beating the $2.10 estimate
- Revenue of $113.2 billion missed Wall Street’s $113.82 billion forecast
- 2026 revenue guidance of $439 billion represents first annual decline in ten years
- Company plans to shed 3 million members as part of turnaround strategy
- Medical benefit ratio expected to improve to 88.8% in 2026 from 89.1% in 2025
UnitedHealth Group posted mixed fourth-quarter results Tuesday. The healthcare giant beat earnings estimates but missed on revenue. More troubling was guidance that points to declining sales ahead.
The company earned $2.11 per share on an adjusted basis. That topped the $2.10 consensus estimate. Revenue reached $113.2 billion but fell short of the $113.82 billion analysts expected.
The real concern sits in 2026 projections. UnitedHealth expects revenue above $439 billion for the year. That’s a 2% drop from 2025 levels.
UnitedHealth Group Incorporated, UNH
This marks the first revenue decline in a decade for the company. CFO Wayne DeVeydt confirmed it’s “the first time in a decade that UnitedHealth Group has had declining revenue.” Wall Street had been looking for $454.6 billion in sales.
Three Factors Behind Revenue Decline
DeVeydt outlined three reasons for the expected drop. The company sold off businesses in the fourth quarter. More divestitures are coming in 2026, including UK and South American operations.
UnitedHealth also expects to lose more than 3 million members this year. The company calls this “right-sizing across the enterprise.” It’s part of a turnaround plan that includes higher prices and reduced benefits.
The third factor involves Medicare’s V28 coding system. The final year of transition will cost UnitedHealth $6 billion in revenue. The insurer will take a $2 billion hit while the Optum health unit absorbs $4 billion.
Cost Controls Show Progress
The medical benefit ratio tells a better story. UnitedHealth expects this metric at 88.8% for 2026, plus or minus 50 basis points. That improves from the 89.1% ratio in 2025.
This ratio measures medical expenses against premiums collected. A lower number means better profitability. The improvement suggests cost control efforts are working.
Medical costs from Medicare Advantage patients spiked over two years. Delayed pandemic procedures like hip and joint replacements drove expenses higher. DeVeydt said fourth-quarter costs were “still elevated and high but not growing beyond expectations.”
Medicare Rate Proposal Hits Stock
Monday brought disappointing news from regulators. The Centers for Medicare and Medicaid Services proposed a 0.09% payment increase for Medicare Advantage plans in 2027. The market expected much more.
UnitedHealth shares dropped over 12% in premarket trading Tuesday. Humana and CVS Health also fell sharply. Medicare Advantage now covers more than half of Medicare beneficiaries.
These government rates determine premiums and benefits insurers can offer. Low rates squeeze margins. UnitedHealth has already reduced Medicare Advantage offerings in response.
The company forecasts 2026 adjusted earnings above $17.75 per share. Analysts expected $17.74 according to LSEG data. The profit outlook slightly exceeded estimates despite revenue pressures.
CEO Stephen Hemsley returned in May to lead the turnaround. The company faced multiple challenges including the murder of an executive, federal investigations, and public backlash over insurance practices.
DeVeydt said UnitedHealth “righted the ship” in the fourth quarter by divesting international operations. The company is focusing on domestic business and has strengthened its balance sheet for future growth.
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