UnitedHealth Group Incorporated Third Quarter 2026 Earnings

• GAAP results follow US accounting rules. UnitedHealth's adjusted results are non-GAAP. Adjusted EPS excludes intangible amortization, net portfolio divestitures and South American impacts, and restructuring and other items. Adjusted earnings from operations excludes only the last two.
• EPS is net earnings attributable to UnitedHealth Group common shareholders per diluted share. Adjusted EPS applies the same math to adjusted net earnings.
• The medical care ratio (MCR) is medical costs divided by premium revenue. A lower ratio means a larger share of premiums is left after paying for care. The operating cost ratio is operating costs divided by total revenue.
• Operating cash flow is cash generated by the business. Free cash flow here is operating cash flow minus purchases of property, equipment and capitalized software, calculated from company reported figures.
• Guidance is management's forecast, not a reported result. Comparisons are year over year unless labeled otherwise.

Earnings recovered strongly from a weak year ago quarter. Net earnings attributable to common shareholders were $4,110 million versus $2,348 million. Adjusted EPS of $4.69 compares with $2.92 a year earlier and $6.38 in the second quarter. The adjustments added $0.41 per share of intangible amortization and subtracted $0.16 for divestitures and South American impacts, $0.08 for restructuring and other items and $0.04 for the tax effect of these adjustments.

Medical costs fell faster than premiums. Premium revenue declined 2.1% to $87,078 million, but medical costs dropped 3.7% to $76,982 million, both calculated from company reported figures. The company credits medical cost management, benefit design changes, pricing discipline and care delivery focused on value-based care. The MCR also benefited from $610 million of net favorable prior period reserve development related to 2026 dates of service, compared with $80 million in the year ago quarter. On the call, management said care intensity remains above historical norms, even as trends are bending in a more stable direction.

The business is smaller than a year ago. UnitedHealthcare served 48.3 million people in medical plans at September 30, 2026, down from 50.1 million a year earlier. Medicare Advantage membership fell to 7.6 million from 8.4 million and Medicaid to 6.7 million from 7.5 million. In the quarter, Employer & Individual lost 165,000 people to employer attrition and Community & State 85,000 due to Medicaid eligibility changes, according to the company.

The operating cost ratio fell to 12.8% from 13.5%, which the company attributes to operating efficiencies, partly offset by higher investment in technology, processes and people. Adjusted earnings from operations, which exclude divestiture, South American and restructuring items, were $6,265 million, an adjusted operating margin of 5.6%.

According to the company, Optum Health's revenue fell "as a result of fewer value-based care patients served in markets where Optum lacked sufficient value-based care presence to sustain its clinicians," while its earnings rose on "strengthened operational discipline and medical cost management initiatives." Optum Rx grew earnings from operations to $1.7 billion from $1.5 billion, citing biosimilar adoption, even though adjusted scripts fell to 393 million from 414 million as UnitedHealthcare and other customers lost members.

Medicaid remains the weakest margin line. On the call, management said: "We continue to view 2026 as a trough year for core Medicaid margins, which we now expect to be moderately better than negative one percent" (management guidance). Medicaid membership fell to 6.7 million at September 30, 2026 from 7.5 million a year earlier.

The company also listed policy commitments: 100% pass-through of manufacturer drug rebates to clients by January 1, 2028, eliminating 30% of current prior approval volume by the end of 2026, and rebating profits from individual ACA plans in 2026 to about 1 million members. For 2027, it reported at least 69% of Medicare Advantage members in plans rated 4 stars or higher, which it called "in line with expectations." On the call, management added: "As we move through 2027 and into 2028, we expect to approach 75% of total members in 4+ star plans, compared to the industry average of 70%" (management guidance). CEO Stephen Hemsley said the results "reflect the discipline and execution our teams are bringing to every part of our business."

Cash and short-term investments were $28,549 million and long-term investments $58,064 million at September 30, 2026. Medical costs payable were $39,352 million, and days claims payable held at 47.0, the same as in the second quarter and up from 46.2 a year earlier. Days sales outstanding improved to 16.9 from 18.6.

Year to date the company repurchased $5.0 billion of stock and paid $6.2 billion in dividends. Based on the cash flow statements, about $3,385 million of the repurchases fell in the third quarter, calculated from company reported figures.

UnitedHealth does not give quarterly guidance. The full year 2026 outlook below is management guidance. The October 13 release updated only the earnings per share lines. It did not restate the July outlook for the medical care ratio of 88.1% ± 25 bps, operating cash flow of about $24.0 billion or share repurchases of at least $5.0 billion.

The GAAP EPS outlook moved to at least $19.50 from $18.45 to $18.95. According to the release, the new outlook incorporates "experience through the third quarter 2026." The release gave no financial outlook for 2027, but management addressed it on the call.

Chief Financial Officer Wayne DeVeydt said: "We would offer that current analyst consensus for 2027 may understate the opportunity ahead, and we see the lower end of our long-term 13-16% growth rate as a more reasonable starting point." He said the company continues to see a balanced set of tailwinds and headwinds in 2027, and management plans to give a more complete 2027 outlook before year-end. This is management guidance in the form of a framing, not a formal 2027 range. Applied to the 2026 adjusted EPS floor, 13% growth would mean about $23.17 per share or more in 2027, calculated from company reported figures as $20.50 × 1.13 ≈ $23.17. That figure is not company guidance, because management gave no 2027 EPS number and did not state the 2026 base it applies the growth rate to.

This quarter showed that UnitedHealth's repair work is lifting profits. Margins rose in every segment, Optum Health is earning money again, operating costs fell as a share of revenue and management raised its outlook for the third time this year.

It did not show that the company can grow again. Revenue was slightly lower, membership fell across Medicare Advantage, Medicaid and employer plans, and part of the medical cost improvement came from releasing reserves set aside earlier in the year. For 2027, management has offered only a framing, the lower end of its 13–16% long-term growth range as a starting point, and no formal outlook yet.

• Q4 2026 adjusted EPS against the implied floor of $2.20, calculated from guidance
• Medical care ratio and the size of any further prior period reserve development after $610 million in Q3 2026
• Medicare Advantage and Medicaid membership after falling to 7.6 million and 6.7 million
• Debt-to-capital ratio against the ≈ 40% year-end target after 41.7% at September 30, 2026
• The more complete 2027 outlook management plans to give before year-end, December according to Reuters, and whether it supports at least the 13% low end of the long-term range, about $23.17 on the $20.50 floor (calculated)