UnitedHealth raises profit outlook after second-quarter earnings beat
The U.S. insurer lifted adjusted EPS guidance to $19.50-$20 after cost controls and pricing helped offset elevated medical spending.
By Amanda Ross · Deals Correspondent
· 3 min read
UnitedHealth Group raised its 2026 adjusted profit outlook after second-quarter earnings and revenue came in ahead of analyst estimates, helped by cost controls, higher pricing and efficiency measures. Its shares rose 6.89% in after-hours trading, according to CNBC market data.
The largest private health insurer in the U.S. said it now expects adjusted earnings of $19.50 to $20 a share for the year, compared with prior guidance of more than $18.25. The company kept its revenue forecast at more than $439 billion, though Chief Financial Officer Wayne DeVeydt said in an interview that the full-year figure could exceed that level after the second-quarter performance.
UnitedHealth reported adjusted earnings of $6.38 a share for the quarter, above the $4.90 expected by analysts surveyed by LSEG. Revenue was $112.03 billion, compared with the $110.85 billion consensus estimate.
Net income rose to $5.48 billion, or $6.04 a share, from $3.41 billion, or $3.74 a share, a year earlier. The adjusted figure excluded items including business divestitures, restructuring costs and an expected reduction of reserves tied to unprofitable contracts.
Medical costs remain above historical levels
DeVeydt said medical costs were still elevated compared with historical patterns, a pressure that has affected the insurance industry for more than two years. He said the quarter did not show that cost trends had come under control, and instead reflected company efforts to reduce an already high expense base.
The company’s medical benefit ratio, which measures medical costs paid as a share of premiums collected, was 86.7% in the quarter. That improved from 89.4% a year earlier and was better than the 88.5% expected by analysts, according to StreetAccount. A lower ratio generally means an insurer kept a larger portion of premiums after paying medical claims.
UnitedHealth said higher healthcare costs are pushing insurers to lift premiums and adjust benefits, contributing to enrollment declines in Affordable Care Act exchange plans and privately run Medicare Advantage plans. The company said revenue has remained stable because price increases are offsetting fewer members.
DeVeydt said that balance was not favorable for the health system over the long term. UnitedHealthcare served 48.5 million people in the second quarter, down 525,000 from the prior quarter. He attributed much of the decline to affordability pressures and projected losses of about 500,000 exchange members and 1.1 million Medicare Advantage members in 2026.
Restructuring and AI investment
UnitedHealth is trying to stabilize margins by reducing membership in weaker areas, leaving unprofitable contracts and investing $1.5 billion in artificial intelligence to improve operations. DeVeydt said AI is being used to speed administrative work such as prior authorizations and to improve payment accuracy by identifying possible fraud, waste and abuse.
He said AI systems are not deciding whether care is approved or denied. He also described the company’s turnaround as a multi-year effort, while saying the operational changes were already contributing to earnings.
Both UnitedHealthcare and Optum, the company’s healthcare services unit, reported sales above analyst estimates for the quarter, according to StreetAccount.
The results follow UnitedHealth’s disclosure about a year ago that it was facing Department of Justice investigations into Medicare billing practices. DeVeydt said the company had no update on the matter and continued to support the investigation.
This story draws on original reporting from CNBC.
