UnitedHealth beat hard and raised — but the margin came off a shrinking Medicare book and $860M of favorable reserve development, not from winning members back.
MCR fell to 86.7% and UNH raised full-year adjusted EPS to $19.50–$20.00. Both moves lean on price discipline and $860M of prior-period development while the MA book shed 965,000 seniors since year-end. Margin is recovering; scale is still leaving.
| Metric | Q2 2026 | Prior yr | YoY | FY Guide |
|---|---|---|---|---|
| Revenue | $112.0B | $111.6B | +0.4% | — |
| Medical care ratio incl. $860M PPD | 86.7% | 89.4% | -2.7pp | — |
| Adjusted EPS beat ~$4.91 cons. | $6.38 | $4.08 | +56.4% | — |
| Diluted EPS (GAAP) | $6.04 | $3.74 | +61.5% | — |
| Earnings from operations | $8.0B | $5.2B | +55.2% | — |
| Operating cost ratio | 12.7% | 12.3% | +0.4pp | — |
| Medicare Advantage members -965K since YE25 | 7.57M | 8.35M | -9.4% | — |
| Medicare & Retirement revenue | $42.4B | $42.6B | -0.5% | — |
| FY26 medical care ratio guide was ±50bp | 88.1% | 88.8% | -0.7pp | 88.1% ±25bp |
| FY26 adjusted EPS guide | $19.50–$20.00 | >$17.75 | — | Raised |
our reported medical care ratio of 86.7% includes $860 million of net favorable prior period medical development, the majority of which is in-year developmentTRANSCRIPT · CFO Wayne DeVeydt · prepared remarks
Transcript context
Thanks, Tim. As Steve noted, we are seeing positive momentum across Optum, with all 3 business segments performing in line or ahead of plan through the first half of the year. OptumHealth is intently focused on improving its clinical care and operational experience to better serve the 20 million people people we care for through primary and specialist care, ambulatory surgery, and home health. Over the last year, we have made significant changes in how we operate this business locally and nationally and are seeing the initial benefits of this approach. We are steadfast in our intent to optimize an integrated value-based care system that benefits patients, care providers, and taxpayers. On the clinical side, we’re advancing approaches that better support care providers and drive measurable improvements to patient care at lower cost. I’ll offer a few examples. First, enhanced support for patients during key transitions of care has resulted in approximately 10% reduction in hospitalization since implementation late last year in the western and southern regions of OptumHealth. Second, home health initiatives to better support patients as they return home, where they can be managed more comfortably and effectively. Have reduced readmissions. In pilots, the effort has driven a more than 20% improvement in timely care delivery alongside reductions in acute care utilization and shorter skilled nursing facility stays. And third, in rural health, we’ve expanded access to care by integrating house calls and home-based care capabilities coupled with treat-in-place offerings for patients with complex chronic and behavioral health conditions. Today, OptumHealth reaches nearly 90% of U.S. Counties and conducts approximately 2.5 million rural patient home visits annually. We will expand these programs across our OptumHealth footprint by the end of 2026. On the operational side of OptumHealth, we have established a clear regional and national management focus. This gives us greater and more timely visibility into performance, driving consistent best-in-class standards across the portfolio and deploying technologies to support clinicians in the important work they do. There is real progress on the rollout of AI-based ambient listening capabilities available to 70% of our employed providers today and on track to exceed 90% by year end. Collectively, these actions are yielding tangible results. Patient experience in our care delivery sites is up approximately 5% year over year, and patient access has expanded by nearly 200,000 more patient-facing hours. We are in the early stages of these efforts. OptumHealth will build upon this foundation with additional investments in clinical workflow improvements, and network performance, more deeply embedding AI and automation to further improve operational performance and clinician experience. Additionally, we entered the 2027 benefit planning season very differently than years past, starting with much earlier proactive collaboration with all our payer partners. This will translate to greater care coordination for patients while more appropriate lining rates, and risk. As our plans and initiatives begin to mature and scale, with disciplined execution, we expect margins to continue to steadily improve. Turning to OptumRx. For a few years now, we have been leading an industry-wide shift towards transparency and fee-based services, where we are delivering affordability and better outcomes regardless of pricing structure. That’s why we continue to win new customers and retain existing ones, with retention rates in the high 90s. In May, we announced a new pharmacy care approach based on a monthly per-member fees, with full PBM and GPO fee transparency and enhanced consumer tools. Client feedback has been positive and focused on how greater transparency and clinical alignment can address trend challenges shifting the conversation to affordable health outcomes versus economic guarantees. This all builds on our industry-leading commitment last year to pass through 100% of manufacturer rebates to customers by the end of 2027. We are well on our way as we expect to end 2026 with more than 95% of clients on 100% pass-through. Moving to OptumInsight. AI-enabled approaches continue to gain traction as more payer and provider customers seek differentiated capabilities to drive better performance. The emerging suite of products includes solutions such as AI-enabled coding, real-time payer and provider interfaces, and clinical quality and safety support. These products are driving real impact for customers, making healthcare simpler, faster, better, and more affordable. For example, ValueConnect is an AI-driven insights platform integrated into provider workflows and electronic health records to improve value-based care performance. Early client results include a 17% reduction in pharmacy costs. Bringing this all together, halfway through the year, we have made steady progress in each of our Optum businesses and will continue to find ways to better serve patients, providers, and customers. I’ll now turn it over to Wayne DeVite.
Thank you, Patrick, and good morning, everyone. I will briefly review second quarter results, then discuss expectations for the remainder of the year as we refresh our 2026 guidance. Overall, the quarter and full year outlook reflect improved performance across our businesses with notable improvements in UnitedHealth Group Incorporated, and OptumHealth. UnitedHealth Group Incorporated adjusted earnings per share of $6.38 compared to $4.08 in the prior year. Total revenues were $112 billion, largely consistent with the prior year, while operating earnings of $8 billion grew 55% year over year. This improvement reflects product and portfolio actions taken over the past 12 months along with more focused and consistent management disciplines. Turning to medical costs, our reported medical care ratio of 86.7% includes $860 million of net favorable prior period medical development, the majority of which is in-year development. This compares to 89.4% in 2Q 2025. Days claims payable was 47 days, up approximately 2.5 days from a year ago. The operating cost ratio was 12.7% for the quarter compared to 12.3% a year ago as we continue to focus on operating discipline while making targeted investments across technology, AI, care delivery enhancements, customer experience, and advancing healthier communities through the UnitedHealth Foundation. Moving to cash flows and our balance sheet. Operating cash flows in the quarter were approximately $11 billion, or 1.9 times net income, reflecting timing of substantial government payments and strong earnings. This provides capital to strengthen the balance sheet, invest in growth, and return value to shareholders. Through mid-July, we have deployed $4 billion for repurchases of 11.4 million shares. We now expect to complete total share repurchases of at least $5 billion in 2026 compared to initial guidance of $2.5 billion. During the quarter, we returned $2.1 billion to shareholders through our dividend, which our board increased to $9.28 per share on an annualized basis. And lastly, on July 2nd, we successfully closed the previously announced combination with Allegis. Our debt-to-capital ratio was 41.2% at the end of the quarter compared to 44.1% one year ago and a 170 basis point sequential improvement from the first quarter of this year. We remain on track to reduce our debt-to-capital ratio to approximately 40% by the end of 2026. As you saw earlier this morning, we have updated our full year 2026 guidance to reflect performance through the first half of the year and a more mature understanding of expected membership mix and utilization patterns for the remaining 6 months. We continue to be respectful of medical trend, and we believe this refreshed outlook appropriately balances risk and investments with durable run rate earnings. A few areas of this outlook to highlight. We’re providing new adjusted earnings per share guidance range of $19.50 to $20. With slightly more earnings in 3Q relative to 4Q. We are increasing the full-year operating earnings outlook for UnitedHealth Group Incorporated to at least $12 billion and for OptumHealth Group Incorporated to at least $2.2 billion. These changes reflect operational improvement underway across the enterprise. We now expect a full-year medical care ratio of 88.1%, plus or minus 25 basis points. We expect the operating cost ratio to come in at the higher end of our previously discussed range as a result of investments in our people, communities and AI. The overall earnings cadence for the year remains consistent with prior expectations. UnitedHealth Group Incorporated earnings continue to be weighted approximately 75% to the first half of the year. Similarly, we expect nearly all of OptumHealth Group Incorporated earnings to be recognized in the first half. UnitedHealth Group Incorporated, with modest profit in 3Q offset by modest losses in the fourth quarter due to the seasonality of the risk-based businesses. In contrast, OptumInsight and OptumRx remain more heavily weighted towards the second half of the year, with each expected to generate approximately 55% of their full year earnings during the back half as client implementations, growth investments and normal business seasonality progress through the year. So overall, we’re seeing a two-thirds, one-third first half to back half mix. Steve, back to you.
Thanks, Wayne. Over the last few quarters, this enterprise has undertaken a broad-based effort to improve how consumers and care providers experience the health system while addressing the chronic cost trends— trend issues driving the everyday challenges of access, affordability, and complexity. Our press release this morning has a sampling of these initiatives. Our efforts focus on essential themes: affordability, transparency, modernization, simplicity, and convenience. As the U.S. Health system continues to evolve, we will evolve our approaches and our businesses as a scaled and diverse enterprise, driving integrated value-based care anchored in the first principles of the right care, at the right time, and in the right setting. A system where incentives are aligned to those first principles and the better health and the better cost trends that drive. Value-based care approaches are a key component of the effort to make healthcare more affordable by bending the cost trend, by better aligning incentives for both consumers and care providers. Artificial intelligence technologies, applied in practical ways that help people can be an accelerator to achieving that goal as we use them to literally reimagine our enterprise. You should expect us to continue along that path and pick up momentum as we better fulfill our mission with accountability to you and all stakeholders in the health system. Now we’ll go to questions. Thank you, operator. ## Question & Answers
We expect the 2026 Medicare medical cost trend to come in below our initial estimates of around 10%TRANSCRIPT · Tim Noel, CEO UnitedHealthcare · prepared remarks
Transcript context
Thank you. Good morning, everyone, and thank you for joining us. Our second quarter results and updated full year 2026 outlook demonstrate continuing progress toward delivering more consistent and dependable performance. They are a sign of stronger, broad-based performance disciplines taking hold in each of our businesses and a restless desire to drive mission-aligned change across the enterprise and advance our social impact. UnitedHealth Group Incorporated has improved performance in its Medicare businesses through thoughtful benefit planning and design, all while remaining respectful of persistently elevated medical costs. Our Medicaid business is in line with expectations as we continue to work with states on ensuring appropriate rates. Our commercial benefits business, consistent with the broader and more diverse commercial market it serves, continues to experience higher-than-expected cost trends due to factors Tim Knoll will discuss shortly. At Optum, we’re seeing building momentum from OptumHealth as the business re-centers back to its integrated value-based care delivery model. This resulted in another quarter of improved care management and greater operating discipline. OptumRx continues to perform to plan as transparency initiatives we announced early this year resonate well in the marketplace. OptumInsight, also on plan, remains on a multi-year path of reinvestment and innovation as we bring modern intelligent technologies and services to the areas of greatest need in the health system. We believe OptumInsight is exceptionally well positioned to help modernize and simplify the health system as it brings AI-enabled tools and services to market. Across the enterprise, we’re focused on serving consumers and care providers in ways that are reliable, affordable, and transparent. That requires us to pay close attention to areas where the system isn’t working well enough. Areas including care approvals, accuracy of information and speed of response, access and scheduling, digital services, care path navigation, and more. 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. AI technology is helping us move faster. We’re using it to improve service interactions, reduce administrative burden, and support better decision-making, always in service of improved experiences and outcomes for both patients and care providers. UnitedHealth Group Incorporated has a long history of evolving to meet the needs of a constantly changing U.S. Health system. That evolution today includes a tech-forward view, actively and appropriately embracing an AI paradigm for our businesses. A management team with skills and vision to help in building a more advanced health system and an ever-evolving organizational structure and culture aligned to that system. Our operating structure today broadly reflects a set of highly reg— highly regulated benefit businesses and a complementary set of products and services for patients, care providers, and customers. We will continue to look to build and evolve ahead of the health system itself. We’re making solid early progress, both in how we better approach those we serve and in our results. We have much more work ahead and need to continue to get better by focusing what matters most with solid management and execution disciplines aligned to our mission to better serve people and the health system itself. With that, I’ll turn it over to Tim Nilsen.
Thanks, Steve. The pricing, benefit design, and market actions we’ve taken over the past year have been central in supporting our second quarter results and improved full-year outlook. As you have seen, UnitedHealth Group Incorporated’s overall performance in the second quarter exceeded expectations, driven by better results in Medicare Advantage while commercial benefits remain pressured. I’ll start with medical costs. Through the first half of the year, we are seeing divergence within our portfolio. Medical cost trends in Medicare are still running well above historical levels, but below our expectations so far in 2026. A primary reason for trend being below our expectations is medic— in Medicare is our own initiatives, including benefit design, UnitedHealth Group Incorporated, care management models, and network curation. Other factors have an influence as well, including prior year development, a more favorable respiratory season, and weather patterns. We expect the 2026 Medicare medical cost trend to come in below our initial estimates of around 10%. Commercial costs are stubbornly high, rising above expectations. Which we believe is consistent with what is being experienced across the sector. Turning to the overall performance of our individual benefit offerings. Medicare delivered a strong second quarter. Membership retention was better than previously anticipated. We now expect full-year Medicare Advantage enrollment to decline by approximately 1.1 million and Medicare margins to finish 2026 above 3%. Looking to our 2027 bids, our benefit planning remains disciplined and grounded in the current trend environment. We will continue to support program and margin stability through actions including benefit adjustments and selective changes in market participation. In Medicaid, overall performance during the quarter, including cost trend, was broadly in line with expectations. We are beginning to see early signs of improvement from initiatives, including those targeting elevated behavioral health cost trends, but we expect Medicaid margins to remain pressured for 2026. Our focus is on closing the gap between lagging reimbursement rates and underlying medical cost trends while continuing to partner closely with states to support the long-term sustainability of Medicaid benefits and support them in identifying and reducing fraud, waste, and abuse. Within our commercial offerings, as I noted, we are not yet seeing evidence of cost trend moderation. In fact, it is the opposite, with medical cost trends modestly above 11% level we previously saw. The primary drivers are pressure from the independent resolution process under the No Surprises Act. UnitedHealth Group Incorporated, which applies only to commercial plans, and more aggressive billing practices among providers, especially higher service and coding intensity and higher cost per encounter that result from the more fee-for-service orientation of commercial plans. At this distance, commercial— commercial margin recovery will remain a focus area longer than originally anticipated. Returning to UnitedHealth Group Incorporated as a whole, we are confident in being able to deliver meaningful earnings growth in 2026 and into 2027 with the reinvestments we are making in the business to build a stronger, more durable foundation for 2027 and beyond. Of equal, if not more importance, we remain intent on modernizing essential healthcare experiences to improve how consumers, patients and care providers experience the health system. For example, in the quarter, we committed to eliminating by the end of this year 30% of prior authorization volume and nearly two-thirds of prior authorization requirements for pediatric care. We continue to take concrete steps to reduce complexity and increase speed by further simplifying prior authorization. Increasing consumer-responsive digital experiences, providing greater support to rural hospitals and care providers, offering more consumer-centered product innovation, and much more. AI is both an enabler and accelerant to this effort. We’re early in this work, but clearly on the path to improve the healthcare experience and strengthen relationships with our stakeholders, starting with consumers and care providers. And we’re confident these efforts will bolster UnitedHealth Group Incorporated’s long-term performance and market position. And now let me hand it to Patrick Connelly.
Thanks, Tim. As Steve noted, we are seeing positive momentum across Optum, with all 3 business segments performing in line or ahead of plan through the first half of the year. OptumHealth is intently focused on improving its clinical care and operational experience to better serve the 20 million people people we care for through primary and specialist care, ambulatory surgery, and home health. Over the last year, we have made significant changes in how we operate this business locally and nationally and are seeing the initial benefits of this approach. We are steadfast in our intent to optimize an integrated value-based care system that benefits patients, care providers, and taxpayers. On the clinical side, we’re advancing approaches that better support care providers and drive measurable improvements to patient care at lower cost. I’ll offer a few examples. First, enhanced support for patients during key transitions of care has resulted in approximately 10% reduction in hospitalization since implementation late last year in the western and southern regions of OptumHealth. Second, home health initiatives to better support patients as they return home, where they can be managed more comfortably and effectively. Have reduced readmissions. In pilots, the effort has driven a more than 20% improvement in timely care delivery alongside reductions in acute care utilization and shorter skilled nursing facility stays. And third, in rural health, we’ve expanded access to care by integrating house calls and home-based care capabilities coupled with treat-in-place offerings for patients with complex chronic and behavioral health conditions. Today, OptumHealth reaches nearly 90% of U.S. Counties and conducts approximately 2.5 million rural patient home visits annually. We will expand these programs across our OptumHealth footprint by the end of 2026. On the operational side of OptumHealth, we have established a clear regional and national management focus. This gives us greater and more timely visibility into performance, driving consistent best-in-class standards across the portfolio and deploying technologies to support clinicians in the important work they do. There is real progress on the rollout of AI-based ambient listening capabilities available to 70% of our employed providers today and on track to exceed 90% by year end. Collectively, these actions are yielding tangible results. Patient experience in our care delivery sites is up approximately 5% year over year, and patient access has expanded by nearly 200,000 more patient-facing hours. We are in the early stages of these efforts. OptumHealth will build upon this foundation with additional investments in clinical workflow improvements, and network performance, more deeply embedding AI and automation to further improve operational performance and clinician experience. Additionally, we entered the 2027 benefit planning season very differently than years past, starting with much earlier proactive collaboration with all our payer partners. This will translate to greater care coordination for patients while more appropriate lining rates, and risk. As our plans and initiatives begin to mature and scale, with disciplined execution, we expect margins to continue to steadily improve. Turning to OptumRx. For a few years now, we have been leading an industry-wide shift towards transparency and fee-based services, where we are delivering affordability and better outcomes regardless of pricing structure. That’s why we continue to win new customers and retain existing ones, with retention rates in the high 90s. In May, we announced a new pharmacy care approach based on a monthly per-member fees, with full PBM and GPO fee transparency and enhanced consumer tools. Client feedback has been positive and focused on how greater transparency and clinical alignment can address trend challenges shifting the conversation to affordable health outcomes versus economic guarantees. This all builds on our industry-leading commitment last year to pass through 100% of manufacturer rebates to customers by the end of 2027. We are well on our way as we expect to end 2026 with more than 95% of clients on 100% pass-through. Moving to OptumInsight. AI-enabled approaches continue to gain traction as more payer and provider customers seek differentiated capabilities to drive better performance. The emerging suite of products includes solutions such as AI-enabled coding, real-time payer and provider interfaces, and clinical quality and safety support. These products are driving real impact for customers, making healthcare simpler, faster, better, and more affordable. For example, ValueConnect is an AI-driven insights platform integrated into provider workflows and electronic health records to improve value-based care performance. Early client results include a 17% reduction in pharmacy costs. Bringing this all together, halfway through the year, we have made steady progress in each of our Optum businesses and will continue to find ways to better serve patients, providers, and customers. I’ll now turn it over to Wayne DeVite.
Seniors served through Medicare Advantage, including programs serving complex populations included in Medicaid, have contracted by 965,000 since year-end 2025.8-K 2026-07-16 · P.5
an independent review of the HouseCalls program that showed the sampled diagnoses were overwhelmingly supported by medical records, with an error rate nearly three times lower than the rate reported by CMS's most recent audits8-K 2026-07-16 · P.3
Adjusted earnings per share of greater than $17.75, with a medical care ratio of 88.8% plus or minus 50 basis points.
Adjusted earnings per share of $19.50 to $20.00, with a medical care ratio of 88.1% plus or minus 25 basis points.
The EPS raise and the tighter, lower MCR band say the same thing: management now trusts its cost-trend read enough to narrow the range. The confidence is in pricing discipline, not membership growth — the book is still contracting.
TT — UNH shows MA margin can be rebuilt on price and reserve development, not volume; the book shrinks to heal.
TT — UNH shedding 965K seniors is the supply behind rivals' MA share gains; the leader is ceding ground.
TT — UNH publishing a HouseCalls coding review signals the DOJ risk-adjustment fight is now fought in public.
UNH's 965,000 exited seniors are displaced MA demand hitting the market before AEP. Pull the counties where UNH cut plans and map them to your footprint now — this is the membership rivals will chase, and a preview of the price discipline UNH will bring to 2027 bids.