UnitedHealth Group on Thursday posted second-quarter earnings that beat previous estimates and raised its full-year profit outlook, as the company better controls higher medical costs and uses AI to help streamline operations.
The largest private insurer in the US said it expects 2026 adjusted earnings of $19.50 to $20 per share, up from a previous outlook of more than $18.25 per share. UnitedHealth is maintaining its full-year guidance of more than $439 billion in revenue. But CFO Wayne DeVeydt said in an interview that he expects the company to “do better than that” given the pace of the second quarter.
Still, he said medical costs this quarter remain “higher than historical levels” — an issue that has plagued the broader insurance industry for more than two years.
“These results do not indicate a bend or a control, but rather our first efforts to reduce what is already a high number,” said DeVeydt.
Here’s what the company reported for the second quarter compared to Wall Street’s expectations, based on a survey of analysts by LSEG:
- Earnings per share: $6.38 adjusted vs. $4.90 expected
- Net worth: $112.03 billion vs. $110.85 billion expected
The company’s stock jumped nearly 7% in premarket trading.
UnitedHealth’s turnaround plan is gaining momentum following a restructuring and executive shuffling designed to combat challenges in the industry. The healthcare giant is working to stabilize margins by cutting memberships, exiting unprofitable contracts and pouring $1.5 billion into artificial intelligence to streamline operations.
DeVeydt said the company is using AI to improve efficiency and patient care. For example, AI helps speed up processes like pre-authorization and improve payment accuracy by detecting potential fraud, waste and abuse. That can help reduce costs while improving patient care. AI tools don’t determine whether care is approved or denied, he said.
“I would say a revolution, and I emphasize that in our culture, it’s really happening … that transformation translates into strong, strong money,” DeVeydt told reporters. “So it shows that if we can do things the way we think they should be done, we can be a solution and be profitable.”
But he emphasized that the transition is “a journey of many years.”
The company posted second-quarter earnings of $5.48 billion, or $6.04 per share, compared to $3.41 billion, or $3.74 per share, in the same period last year. Excluding items such as business divestments, restructuring and an expected reduction in unprofitable contract reserves, UnitedHealth earned $6.38 per share.
Revenue rose to $112.03 billion from $111.62 billion in the year-ago quarter. The company’s insurer, UnitedHealthcare, and health unit Optum both topped analysts’ sales estimates for the quarter, according to StreetAccount.
UnitedHealth said rising health care costs are forcing insurers to raise premiums and adjust benefits, contributing to the loss of membership in both the ACA’s exchange programs and privately run Medicare Advantage plans. The company said revenue was stable because higher prices offset declining enrollments.
But DeVeydt said the dynamic is “not a good thing for the long-term plan.”
UnitedHealthcare served 48.5 million people in the second quarter, down 525,000 from the previous quarter. DeVeydt’s membership is said to be declining due to affordability pressures driven by higher health care costs, predicting a loss of nearly 500,000 ACA exchange members and 1.1 million Medicare Advantage members by 2026.
Insurers, especially those using Medicare Advantage plans, have been squeezed by the influx of people seeking care, delaying post-pandemic drugs and high costs such as GLP-1s, among other things.
But UnitedHealth’s medical profitability ratio — the ratio of medical expenses paid compared to premiums collected — came in at 86.7% in the second quarter. That’s an improvement from the 89.4% reported a year ago. A lower ratio usually indicates that the company collected more premiums than it paid out in benefits, resulting in higher profits.
Analysts were expecting an average of 88.5% for the quarter, according to StreetAccount.
The results come a year after UnitedHealth revealed it was facing a Justice Department investigation into its Medicare billing practices.
DeVeydt said the company has no updates but continues to “support” the investigation.
