UnitedHealth Group shares advanced roughly 1.5% in premarket trading Tuesday after the health insurance giant delivered third-quarter earnings that topped Wall Street expectations and lifted its full-year 2026 profit guidance.
The company reported adjusted earnings of $4.69 per share for the quarter, a sharp increase from $2.92 in the year-ago period and above the consensus estimate of $4.14, according to LSEG data. Revenue reached $112.69 billion, surpassing the $111.40 billion analysts had projected, though it slipped from $113.2 billion in the third quarter of 2025.
Looking ahead, UnitedHealth now expects adjusted earnings of at least $20.50 per share for 2026, raising its previous forecast of $19.50 to $20.00. Analysts had been modeling full-year adjusted earnings of $19.86, per LSEG.
The results mark another step in the company's recovery from a turbulent stretch that included missed financial targets, a major cyberattack, and persistent medical cost inflation. The stock has gained about 13% year-to-date.
Heading into the report, analyst sentiment remained broadly constructive. The stock carried a “Moderate Buy” consensus rating from 28 analysts, with an average 12-month price target near $462.59—implying more than 22% upside from Monday's close. Piper Sandler's Jessica Tassan identified UnitedHealth as the most actionable Medicare Advantage stock in her coverage, while TD Cowen maintained a Buy rating despite trimming its price target to $402.
Medical cost ratio improves
UnitedHealth posted a third-quarter medical care ratio of 88.4%, below analyst estimates and down from 89.9% a year earlier. The metric measures the share of insurance premiums consumed by medical claims; a lower ratio generally signals stronger profitability.
The company attributed the improvement to changes in plan design and new pricing on its products. It has also exited certain health insurance offerings and appointed new senior executives after missing financial estimates last year.
However, CFO Wayne DeVeydt cautioned that the improvement should not be read as evidence that medical cost pressures have vanished. Speaking to CNBC, he said medical costs in the quarter “continue to be elevated versus historical norms.” He added, “I think it’s something we should keep an eye on. I think you’ll see that our medical care ratio has improved quite a bit, but I don’t want that to be misleading in terms of [medical cost trends].”
Elevated medical spending has challenged health insurers for more than two years, particularly those running privately managed Medicare Advantage plans.
Insurance revenue declines as membership shrinks
Revenue from UnitedHealth's insurance business fell to $86.3 billion from $87.1 billion a year earlier. Still, operating earnings and profit margins improved, supported by benefit changes, pricing adjustments, and tighter control over medical and operating costs.
UnitedHealthcare administers Medicare Advantage plans for seniors and eligible individuals with disabilities, as well as Medicaid plans for low-income Americans on behalf of state governments. The company reported continued membership losses across several insurance segments.
Employer-sponsored health plan membership declined by 165,000 people due to attrition, while another 85,000 left its Medicaid rolls following eligibility changes. UnitedHealth also noted that 935,000 members had exited its Medicare Advantage business since the end of 2025.
Optum supports operating profit growth
UnitedHealth's operating income climbed to $6.6 billion in the third quarter from $4.3 billion in the same period last year, largely reflecting improved performance at Optum Health, its clinical care business. The company said technological investments had reduced the overall costs of providing medical services, helping support operating performance.
Optum also exited less favorable contracts for certain health plans that had weighed on earnings in the first quarter. The unit had previously faced regulatory and cost challenges, which UnitedHealth said last year represented an $11 billion hit to the business over three years.
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