UnitedHealth Group reported third-quarter adjusted earnings of $4.69 per share and raised its full-year profit outlook. The insurer's medical cost ratio came in at 88.4%, though its CFO said medical costs remain elevated versus historical norms.
UnitedHealth Group posted third-quarter adjusted earnings of $4.69 per share, against $4.14 expected by analysts surveyed by LSEG. The nation's largest private insurer also raised its full-year profit outlook.
The company now expects fiscal 2026 adjusted earnings of at least $20.50 per share, up from a previous outlook of $19.50 to $20 per share.
Revenue edges lower while profit climbs
Revenue came in at $112.69 billion, above the $111.40 billion analysts expected, but below the $113.16 billion of the prior-year quarter. Net income reached $4.11 billion, or $4.56 per share, compared with $2.35 billion, or $2.59 per share, a year earlier.
UnitedHealth is working to stabilize margins by shrinking membership, exiting unprofitable contracts and ramping up investments in artificial intelligence and value-based care. Both its UnitedHealthcare insurer and its Optum healthcare unit topped analysts' operating earnings estimates, according to StreetAccount.
Medical costs stay in focus
The medical cost ratio, which measures medical expenses paid relative to premiums collected, came in at 88.4% versus the 89.9% analysts expected, according to StreetAccount. A lower ratio typically indicates higher profitability.
Even so, CFO Wayne DeVeydt told CNBC that medical costs "continue to be elevated versus historical norms". He said the independent dispute resolution process under the No Surprises Act is adding at least 100 basis points to total medical costs.
DeVeydt added that costs for inpatient services and pharmacy, particularly specialty drugs for cancer and rare diseases, remain elevated.
Value-based care and AI show results
DeVeydt said acute hospital admissions among UnitedHealth members fell 15% year over year through the third quarter, while home health admissions rose 10%. Appointment scheduling done by patients increased 27% year over year, he said.
He expects these initiatives to have a compounding effect on medical cost management through the fourth quarter and into 2027 as the programs expand.
Source: CNBC
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