UnitedHealth Group shares climbed about 1.5% in premarket trading on Tuesday after the US health insurer reported third-quarter earnings above analyst expectations and raised its full-year 2026 profit forecast.
The company earned $4.69 per share on an adjusted basis in the third quarter, up from $2.92 a year earlier and above the average analyst estimate of $4.14, according to data compiled by LSEG.
Revenue came in at $112.69 billion, exceeding expectations of $111.40 billion.
However, it was down from $113.2 billion in the third quarter of 2025.
UnitedHealth now expects adjusted earnings of at least $20.50 per share in 2026, raising its previous forecast of $19.50 to $20 per share.
Analysts had expected full-year adjusted earnings of $19.86 per share, according to LSEG data.
The results mark another step in the company’s efforts to recover from a difficult period marked by missed financial targets, a major cyberattack and rising medical costs.
The stock is up about 13% this year.
Heading into the earnings report, analyst sentiment towards UnitedHealth remained broadly positive.
The stock had a “Moderate Buy” consensus rating from 28 analysts, with an average 12-month price target of around $462.59, representing an over 22% upside from Monday’s close.
Piper Sandler’s Jessica Tassan had identified UnitedHealth as the most actionable Medicare Advantage stock in her coverage, while TD Cowen maintained its Buy rating despite lowering its price target to $402.
Medical cost ratio improves
UnitedHealth reported a third-quarter medical care ratio of 88.4%, below analysts’ estimates and down from 89.90% a year earlier.
The ratio measures the proportion of insurance premiums spent on medical care.
A lower figure generally indicates that an insurer is retaining more of its premium revenue after paying healthcare claims, supporting profitability.
The company attributed the improvement to changes in plan design and new pricing on its products.
It has also withdrawn from certain health insurance offerings and appointed new senior executives after missing financial estimates last year.
However, chief financial officer Wayne DeVeydt cautioned that the improvement should not be interpreted as evidence that medical cost pressures have disappeared.
Speaking to CNBC, DeVeydt said medical costs in the quarter “continue to be elevated versus historical norms”.
“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],” DeVeydt said.
Elevated medical spending has challenged health insurers for more than two years, particularly companies operating 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.
Nevertheless, earnings from operations and profit margins improved, supported by benefit changes, pricing adjustments and tighter control over medical and operating costs.
UnitedHealthcare operates Medicare Advantage plans for people aged 65 and older, as well as eligible people with disabilities.
It also administers Medicaid plans for low-income Americans on behalf of state governments.
The company reported continued membership losses across several parts of its insurance business.
Membership in its employer-sponsored health plans declined by 165,000 people due to attrition, while another 85,000 people left its Medicaid rolls following eligibility changes.
UnitedHealth also said that 935,000 members had exited its Medicare Advantage business since the end of 2025.
Optum supports operating profit growth
UnitedHealth’s operating income rose 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 its operating performance.
Optum also exited less favourable 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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