Is UnitedHealth Group a Buy After Its Latest Earnings Report?

UnitedHealth Group (NYSE: UNH) continued its strong 2026 performance on Thursday by delivering an outstanding second-quarter earnings report, with lower medical costs allowing profitability to soar. UnitedHealth Group raised its full-year guidance, and shares were up more than 8% in morning trading.

UnitedHealth Group stock is now up 37% in 2026, but it still has a potential long runway. The nation's largest health insurer is still more than 25% off all-time highs set in 2024 and seems to be building momentum to return to those lofty levels.

UnitedHealth Group's earnings

Revenue for the second quarter was solid, but unspectacular, coming in at $112 billion versus $111.6 billion a year ago. But earnings from operations were much higher, at $8 billion versus $5.2 billion in Q2 2025. And earnings per share were $6.04, up from $3.74 a year ago.

In addition, the company's medical care ratio -- the percentage of premium revenue paid in medical claims -- was 86.7%, compared to 89.4% a year ago. Management attributed the improvements to pricing discipline, member mix, and medical cost management initiatives.

"Our results and outlook reflect the continuing progress in our work to simplify how we operate, improve both affordability and the healthcare experience for patients and care providers, and apply modern technology to create real improvement for people," CEO Stephen Hemsley said.

UnitedHealth Group increased its full-year guidance to $25.45 billion in operating earnings, versus previous expectations of $24 billion. The company now expects adjusted earnings per share to be in a range of $19.50 to $20, versus previous guidance of $17.75 per share. It expects the full-year medical care ratio to be 88.1%, down from a previous expectation of 88.8%.

Improvements at Optum

Optum, which is UnitedHealth Group's healthcare services and technology business, also showed improved performance for the quarter. Revenue dropped from $67.2 billion a year ago to $65.7 billion in the most recent quarter as Optum served 700,000 fewer patients. However, earnings from operations were $4 billion, up from $3.1 billion a year ago.

Management attributed the improvement to operational improvements and medical cost management. And Optum is also rolling out a series of AI-enhanced products that should improve the company's revenue in the future, including autonomous coding and digital prior authorization tools.

"We are committed to making the health system work better for all stakeholders by simplifying processes, by being clearer, more consistent, and faster in the experience we offer, and by redesigning and modernizing that experience altogether," Hemsley said. "AI technology is helping us move faster."

Is UnitedHealth Group stock a buy?

UnitedHealth Group is a much different company than it was a year ago -- you may recall that the insurer missed analysts' estimates in the first quarter of 2025, triggering a massive sell-off and forcing management to undertake a host of projects to improve margins, including redesigning benefits, repricing plans, and making operational changes.

That work isn't over, but UnitedHealth Group is well on its way. And now that the federal government has announced better-than-expected payment rates for Medicare Advantage plans in 2027, increasing payments by 2.48%, UnitedHealth Group will be better positioned to maintain its margins and keep its medical care ratio at a reasonable level.

On top of that, UnitedHealth Group stock pays a solid 2% dividend yield, which is better than the 1.6% average yield for healthcare stocks.

Can the stock return to its 2024 high and top $600? That's a long road to go, but UnitedHealth Group is in a much better position today than it was a year ago, and I think it's a strong buy moving on the strength of its earnings report and guidance increase.

Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.