UnitedHealth Group reported third-quarter earnings of $4.69 per share, surpassing analyst expectations of $4.14, and revenue of $112.69 billion, exceeding the forecast of $111.40 billion. The company also raised its fiscal 2026 adjusted earnings outlook to at least $20.50 per share, up from a previous range of $19.50 to $20.
This positive performance is attributed to a successful turnaround strategy that includes reducing membership in unprofitable contracts and increasing investments in value-based care, which focuses on patient health outcomes rather than the volume of services provided. The company's medical cost ratio improved to 88.4%, better than the expected 89.9%, indicating higher profitability.
However, CFO Wayne DeVeydt cautioned that medical costs remain elevated, influenced by the independent dispute resolution process under the No Surprises Act, which is adding to claims costs.
Despite these challenges, UnitedHealth's initiatives in value-based care and artificial intelligence are expected to help manage costs effectively, as evidenced by a 15% year-over-year decrease in acute hospital admissions among its members. The company's shares rose approximately 3% in premarket trading following the earnings announcement