UnitedHealth Group Inc. signs on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, December 31, 2025.
Michael Nagle | Bloomberg | fake images
UnitedHealth Group on Tuesday posted a modest improvement in fourth-quarter earnings but issued soft revenue guidance, as the parent company of the country's largest private insurer works to recover amid higher-than-expected medical costs.
Here's what the company reported for the fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: Adjusted $2.11 vs. expected $2.10
- Revenue: $113.2 billion vs. $113.82 billion expected
The results come two days after UnitedHealth CEO Stephen Hemsley and other CEOs of Minnesota's largest companies joined together to sign an open letter calling for an “immediate de-escalation of tensions” in the state after federal immigration agents shot and killed U.S. citizen Alex Pretti, a 37-year-old ICU nurse.
The company posted fourth-quarter net income of $10 million, or 1 cent per share, compared with $5.54 billion, or $5.98 per share, in the same period a year earlier. Excluding items such as business divestitures, restructurings and costs related to a massive cyberattack on its Change Healthcare business unit, UnitedHealth earned $2.11 per share.
Revenue rose from $100.81 billion in the prior-year quarter.
UnitedHealth has a new leadership team to carry out a recovery plan. The strategy involves reducing membership, raising prices, cutting benefits and increasing transparency to restore profitability (along with the company's reputation) after a series of hurdles over the past two years.
UnitedHealth expects 2026 revenue to exceed $439 billion, a 2% year-over-year decline that reflects “right-sizing across the enterprise,” the company said in a statement. That's well below the $454.6 billion in sales analysts expected for the year.
“It's the first time in a decade that UnitedHealth Group has had a decline in revenue,” Chief Financial Officer Wayne DeVeydt said in an interview, referring to sales guidance.
He pointed to three factors driving the expected decline, including the company's divestitures in the fourth quarter and others planned for later this year, such as its operations in the United Kingdom and South America. It also noted a “fairly sizable” overall decline in American membership of more than 3 million in 2026.
“I would say that in the fourth quarter we righted the ship in the sense that we eliminated through friction, obviously, the operations in South America and Europe,” he said. “We are focusing on domestic US businesses and have essentially strengthened the balance sheet and repositioned the company for the historic growth that investors have seen.”
The third factor is that 2026 is the last year of the transition to Medicare's new coding system, known as V28, which has reduced payments to insurers by changing the way patients' diagnoses are weighted, DeVeydt said. That will translate into a revenue hit of $6 billion, of which $2 billion will hit the company's insurer, UnitedHealthcare, and the rest will hit its healthcare unit Optum, he said.
On Monday, shares of UnitedHealth and other health insurers plunged after the Centers for Medicare and Medicaid Services proposed nearly flat payment rates for insurers of Medicare Advantage, the privately administered insurance program that now covers more than half of all Medicare beneficiaries.
That closely watched government payment rate determines how much insurers can charge for the monthly premiums and plan benefits they offer and ultimately helps shape their profits.
Medical costs for Medicare Advantage patients have skyrocketed over the past two years as more seniors return to hospitals for procedures they had delayed during the pandemic, such as joint and hip replacements. In the fourth quarter, those medical costs “were still high and high, but they didn't grow beyond expectations,” DeVeydt said.
By 2026, UnitedHealth expects its insurance segment's medical benefit ratio (a measure of total medical expenses paid relative to premiums collected) to be 88.8%, plus or minus 50 basis points. That would be an improvement over the 89.1% ratio reported for 2025. A lower ratio generally indicates that the company collected more in premiums than it paid out in profits, resulting in higher profitability.
