UnitedHealth Group on Thursday posted second-quarter earnings that beat estimates and raised its full-year profit outlook as the company better manages high medical costs and uses artificial intelligence to help optimize operations.
The largest private U.S. insurer said it expects 2026 adjusted earnings of $19.50 to $20 per share, down from a previous outlook of more than $18.25 per share. UnitedHealth maintains its full-year revenue guidance of more than $439 billion. But Chief Financial Officer Wayne DeVeydt said in an interview that he expects the company to “do better than that” given the progress of the second quarter.
Still, he said medical costs in the quarter remained “elevated above historical levels,” an issue that has plagued the broader insurance industry for more than two years.
“These results are not a reflection of a trend that is changing or under control, but rather our efforts to begin to reduce what is already a high number,” DeVeydt said.
Here's what the company reported for the second quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: Adjusted $6.38 vs. expected $4.90
- Revenue: $112.03 billion vs. $110.85 billion expected
The company's shares rose more than 7% in morning trading.
UnitedHealth's turnaround plan is gaining momentum following restructuring and an executive shakeup designed to counter challenges in the industry. The healthcare giant is working to stabilize margins by reducing membership, canceling unprofitable contracts and investing $1.5 billion in artificial intelligence to streamline operations.
DeVeydt said the company is using AI to improve both efficiency and patient care. For example, AI is helping to speed up processes such as prior authorizations and improve payment accuracy by detecting potential fraud, waste and abuse. That can help reduce costs while improving patient care. AI tools do not determine whether care is approved or denied, he said.
“I would say that change, and I would emphasize that in our culture, it is really happening… that change is translating into very, very strong gains,” DeVeydt told reporters. “This shows that when we can do things the way we think they should be done, we can be a solution and be profitable.”
But he emphasized that change is a “multi-year journey.”
The company posted second-quarter net income of $5.48 billion, or $6.04 per share, compared with $3.41 billion, or $3.74 per share, in the same period a year earlier. Excluding items such as business divestitures, restructuring and the expected reduction in reserves for unprofitable contracts, UnitedHealth earned $6.38 per share.
Revenue rose to $112.03 billion from $111.62 billion in the prior-year quarter. The company's insurer, UnitedHealthcare, and its healthcare unit Optum beat analysts' sales estimates for the quarter, according to StreetAccount.
UnitedHealth said rising health care costs are forcing insurers to raise premiums and adjust benefits, which is contributing to membership losses in both Affordable Care Act exchange plans and privately managed Medicare Advantage plans. The company said revenue has remained stable because higher prices are offsetting the decline in enrollment.
But DeVeydt said the dynamic is “not a good thing for the system in the long run.”
UnitedHealthcare served 48.5 million people in the second quarter, 525,000 fewer than the previous quarter. DeVeydt attributed the membership decline largely to affordability pressures driven by higher health care costs, and forecast a loss of approximately 500,000 ACA exchange members and 1.1 million Medicare Advantage members in 2026.
Insurers, particularly those that administer Medicare Advantage plans, have been hit by an influx of people seeking care and delayed high-cost, post-pandemic specialty drugs like GLP-1s, among other factors.
But UnitedHealth's medical benefit ratio (a measure of total medical expenses paid relative to premiums collected) was 86.7% in the second quarter. That's an improvement from the 89.4% reported in the same period last year. A lower ratio generally indicates that the company collected more in premiums than it paid in profits, resulting in higher profitability.
Analysts expected a ratio of 88.5% for the quarter, according to StreetAccount.
The findings come about a year after UnitedHealth revealed that it faces Justice Department investigations into its Medicare billing practices.
DeVeydt said the company has no updates but continues to cooperate with the government.
