UnitedHealth on Tuesday said it expects adjusted profit per share for 2026 to come in just above Wall Streets consensus, a sign that the company's recent efforts to rein in medical costs are beginning to produce tangible results.
The company forecast annual profit per share of greater than $17.75, compared with analysts average estimate of $17.74, based on data compiled by LSEG.
Management context and recent leadership changes
The announcement comes as Stephen Hemsley, who returned to the chief executive role in May, has been focused on restoring confidence among investors and consumers. Hemsleys return followed a difficult stretch for the insurance giant that included the murder of a top executive, a surge in medical costs, a federal probe and broad public dissatisfaction with insurance industry practices.
Headwinds within government programs
UnitedHealth signaled a continued, challenging recovery in its Medicaid business, attributing weakness to a mismatch between payment rates and the costs of medical services for lower-income Americans. The company has also scaled back some Medicare Advantage offerings for older adults, reflecting pressure across government-backed plans.
The insurer said it has faced elevated costs in government programs for more than two years, driven by higher utilization of behavioral health services, specialty drugs and home-health services.
Medicare Advantage rate proposal and market reaction
The U.S. government on Monday proposed an average increase of 0.09% in payments to private insurers for Medicare Advantage plans next year, a move far below Wall Street expectations. If the proposal stands, the rate change would translate into more than $700 million in payments to Medicare Advantage plans in 2027, the administration estimated.
That proposed rate lift sent shares of several leading insurers - including Humana, CVS Health and UnitedHealth - down more than 8% in premarket trading.
CMS typically finalizes Medicare Advantage rates in early April.
Recent financial metrics
For the year, UnitedHealth reported an adjusted medical care ratio - the share of premiums paid out for medical care - of 88.9%, up from 85.5% in 2024. Analysts on average had expected a ratio of 89.1% for 2025.
The company said the increase in the medical care ratio was driven by reduced Medicare funding, provisions from the Inflation Reduction Act and accelerating medical cost trends.
On an adjusted basis, UnitedHealth posted fourth-quarter earnings of $2.11 per share, narrowly outpacing analysts consensus of $2.10, according to LSEG data.
The company appears to be making incremental progress on cost containment while continuing to navigate persistent cost pressures and regulatory uncertainty in government-sponsored plans.