UnitedHealth (UNHUS) Q3 results exceeded expectations: falling medical claims boosted profits, once again raised full-year profit guidelines

Zhitong Finance App learned that United Health (UNH.US) announced the results for the third quarter of 2026 and raised the annual profit guidelines. Third-quarter adjusted earnings per share of $4.69 exceeded expectations, and for the third time in the year, the full-year guidance was raised to at least $20.50. Revenue for the quarter was $112.694 billion, down 0.4% year over year, still higher than market expectations of about $111 billion. Operating profit was US$6.563 billion, up 52% year over year, with a net profit margin of 3.6%. The company is the first major US healthcare group to announce third-quarter results, and the results are viewed as a trend vane for the industry.

On the profit side, diluted earnings per share in GAAP terms were $4.56, up 76% year over year; adjusted earnings per share after excluding items such as amortization of intangible assets, asset disposal, and restructuring were $4.69, up 61% year over year. According to analyst data compiled by LSEG, the market previously expected adjusted earnings of $4.14 per share, which actually exceeded $0.55. Net profit attributable to common shareholders was $4,110 million, up 75% year over year.

Cost control was the main driver this season. The medical reimbursement rate for the quarter was 88.4%, better than analysts' expectations of 89.9% and 89.90% in the same period last year. The company attributed this to insurance product design adjustments and new pricing. The company disclosed that this ratio included $610 million of net positive advance reserve releases — that is, funds previously accrued for medical claims and ultimately not spent. Chief Financial Officer Wayne DeVeydt said healthcare costs were “still high but very stable”. The operating expense ratio for the quarter fell from 13.5% to 12.8%; operating cash flow was $5.1 billion, or 1.2 times net profit.

By business, UnitedHealthcare's revenue in the insurance sector was US$86.330 billion, down 0.9% year on year. Operating profit increased from US$1,805 billion in the same period last year to US$2,831 billion, profit margin increased from 2.1% to 3.3%, and served 48.3 million members. Optum's revenue in the health services sector was US$66.883 billion, down 3.3% year on year, and operating profit increased from US$2.51 billion to US$37.32 billion; of these, Optum Health's revenue fell 10% year over year to US$22.91 billion due to reducing the number of patients served in a market that lacked sufficient value medical infrastructure, but operating profit rebounded from US$41 million to US$735 million.

According to reports, Optum Health is shrinking: the company said at the beginning of the year that it would cut about 20% of clinics and about 550 outlets. Most of them were completed in the first half of the year, and the process will end before the end of 2026. DeVeYDT said the goal is to transfer these clinics to new owners rather than close them, and “we have no plans to close at this stage.” He also said that Optum Health's annual operating profit will exceed $2.2 billion.

On the membership side, the company continues to actively reduce its size. Employer and individual businesses declined by 165,000 this quarter, and community and state businesses decreased by 85,000 due to changes in Medicaid eligibility; the company disclosed that since the end of 2025, the number of elderly members served through Medicare Advantage and related programs (including complex groups covered by Medicaid) has decreased by 935,000. The company said that at least 69% of members in the 2027 Medicare Advantage Star Rating entered a four-star or higher plan, “in line with expectations,” and mentioned improvements in 11 of the 12 HEDIS quality indicators. However, the federal government downgraded the quality rating of some UnitedHealthcare plans last week, and analysts at Evercore ISI and TD Cowen estimate this could reduce the company's 2028 revenue by more than $1 billion. DeVeYdt said membership growth is expected to resume in 2027: “Is growth being considered? We believe so.”

In terms of guidance, the company raised its adjusted earnings per share guidance for the full year of 2026 to at least $20.50 (previously $19.50 - $20.00) and the GAAP diluted earnings per share guide to at least $19.50. This is the third time in the year that the company has raised its full-year guidelines. According to LSEG data, analysts' previous expectations for the company's full 2026 earnings per share were $19.86, and the lower limit of the new guidance is higher than agreed.

UnitedHealth CEO Stephen Hemsley said the third-quarter results “reflect the team's discipline and execution in every aspect of the business.” The company also listed a number of initiatives around affordability, medical approval reform, and drug pricing transparency, including investing $1 billion in the United Health Foundation, canceling 30% of the existing pre-approval volume by the end of 2026, and transferring 100% of pharmaceutical company rebates to customers from January 2028.

This round of upward guidance is the latest step in the company's transformation process. In the past two years, UnitedHealth experienced the largest cyber attack in the history of the US healthcare industry, failed to reach financial goals, and was once forced to withdraw its performance guidelines. The company also changed several senior management personnel and withdrew from some health insurance product lines. The company previously stated that its Optum Group faced regulatory and cost challenges, and the related impact impacted the subsidiary about $11 billion over three years. According to Bloomberg, the company is also seeking private equity to help operate some doctors' clinics; uncertainty will rise further as federal policy changes such as the 2027 Medicaid work requirements take effect.

Driven by an increase in performance and guidance, UnitedHealth's stock price rose before the market on October 13. As of press release, the stock was up 2.5% to around $388 in the premarket. The financial report also boosted the stock prices of UnitedHealth's peers, including Humana (HUM.US), CVS Health (CVS.US), Centene (CNC.US), Alignment Healthcare (ALHC.US), and Elevance Health (ELV.US).