4 takeaways from UnitedHealth Group’s first quarter earnings call

UnitedHealth Group first quarter 2026 results were stronger than expected with reported adjusted earnings per share of $7.23 and total revenue of $111.7 billion, a 2% increase over the first quarter of 2025. All of the company’s major operating segments exceeded internal plan targets, and the full-year adjusted earnings per share outlook was raised to $18.25.

The first quarter 2026 medical care ratio was 83.9% compared with 84.8% in the first quarter 2025. The year-over-year decrease was driven by strong medical cost management and favorable reserve development, partially offset by consistently elevated utilization and unit cost trends, company officials said in a news release.

“The first quarter unfolded largely as expected, reflecting actions taken in the past several months to drive consistent performance across each business. The quarter saw continued progress in advancing our organization's performance culture and better business practices,” Stephen Hemsley, CEO of UnitedHealth Group, said during a call with investors this morning.

Hemsley said the company this year was moving forward on a strategy discussed earlier this year to increase transparency, use technology to reshape healthcare delivery, and address challenges in the Medicare Advantage program. The company has launched a sweeping artificial intelligence investment agenda and has refocused on businesses in the United States, selling non-U.S. businesses.

Medicare Advantage: A cautious 2027 outlook

Medicare Advantage remains the company’s most closely watched. Executives confirmed that medical cost trends in the program remain elevated but are tracking in line with pricing assumptions, which were set at approximately 10% heading into 2026, above the 7% and 8% trend range that defined the prior two years.

At the same time, membership is contracting. The company now expects Medicare Advantage enrollment to decline by approximately 1.3 million members for 2027. “Our 2026 approach prioritized margin recovery and product facilities with a deliberate trade-off on membership growth, particularly in Medicare and the commercial market,” Tim Noel, UnitedHealthcare CEO, said during the call.

On the 2027 Medicare Advantage rate, leadership expressed appreciation for CMS's final rate notice. Earlier this month, CMS said it would increase Medicare Advantage 2027 rates by 2.48%, a $13 billion increase, which was higher than initially expected. CMS’ January Advance Notice proposed an average increase of just 0.09%, or about $700 million. That earlier proposal triggered sharp declines in insurer stock prices. Still, Noel said they are expecting medical trend levels for 2027 to remain above current funding levels but he said that is in line with its pricing assumption.

Value-Based Care: Operational Gains

Optum Health reported first-quarter adjusted earnings of $1.3 billion. Patrick Conway, CEO of Optum, cited a study in the American Journal of Managed Care that found that among nearly 2 million dual-eligible patients, those in value-based care arrangements had 24% fewer acute inpatient hospital admissions and 29% fewer emergency room visits compared to those in traditional Medicare. The American Journal of Managed Care is a sister publication of Managed Healthcare Executive.

“We are improving patient experience and outcomes through efforts to stabilize staffing, increase productivity, improve scheduling and standardize workflows in both our value-based and fee-for-service models," Conway said.

He said the company is already producing measurable results. Since the last quarter of 2025, clinical reviews have increased by more than 50% with earlier patient intervention and more consistent care coordination. This has resulted in a drop in skilled nursing facility admissions by approximately 35% in the first month of this year compared with the prior year. Fee-for-service operations saw a 12% year-over-year increase in patient-facing hours following new scheduling standards now deployed across roughly 70% of settings.

AI: An enterprise-wide transformation

UnitedHealth Group is investing approximately $1.5 billion in artificial intelligence initiatives across the organization in 2026 and executives are reimagining of how the company operates. “Early capabilities are already improving experiences for consumers and care providers, increasing productivity and reducing administrative burden,” Hemsley said. “The application of technology has long been foundational to how this enterprise operates and how we can help others across the health system.

Roughly one-third of the investment is directed at software products and platforms within Optum Insight, with the remaining two-thirds deployed across core enterprise processes and functions, including member experience, clinical workflows, administrative simplification, and corporate functions such as HR and finance.

The company recently launched a generative AI chatbot for UnitedHealthcare members, with plans to expand it to more than 20 million members by year-end. Digital adoption metrics reflect significant momentum: 73 million digital visits occurred in the first quarter, up 42% over the past two years. “Digital self-service is now the primary way members interact with us, with over 80% of consumer contacts through digital formats,” Noel said.

For providers, digital transaction volume rose 75% year over year, with about 75% of in-network providers using the company’s portal or API tools. “This improves real-time access to eligibility benefits and claim status while reducing manual outreach, enabling clinicians to spend more time on caring for patients. We are intensifying our efforts to help independent rural health care providers,” Noel said.

OptumRx’s PreCheck prior authorization capability now reduces prescription approval time from over eight hours to under 30 seconds, delivering a 68% reduction in denials due to missing information and an 88% reduction in appeals. Conway said the company started the year by onboarding more than 800 new clients while reducing contact call center volumes 25% through enhanced digital and AI-enabled self-service with member satisfaction over 95%. Currently, the company is scaling up the program with the Cleveland Clinic with a goal of more than 20 health systems using PreCheck this year.

At Optum Insight, Optum Real, an AI-first claims and coverage platform that launched in October 2025, has processed roughly half a billion transactions to date and is expected to reach 2.5 billion by year-end. Internal projections call for a 2-to-1 return on AI investments over the next few years, with many programs expected to pay back within 12 to 18 months.

PBM reform: watching Tennessee

Executives said all reform-related financial impacts have been incorporated into guidance for both the remainder of 2026 and future years.

UnitedHealth Group executives said during the investor call that they remain focused on transparency, pointing to a 15-part Transparency Guarantee. This includes the company’s PriceEdge affordability tool, which now serves 14 million members and compares direct-to-consumer cash prices for generic drugs against insurance pricing. Executives said their combined affordability programs — including Specialty Savings IQ and critical drug initiatives — would deliver more than $1.5 billion in savings to patients this year. More than 80% of claims through the company's PBM flow through a network where independent pharmacies are reimbursed at cost-based rates.

Executives expressed concern, however, about PBM reform in the state of Tennessee. Just yesterday, the Tennessee Senate passed SB2040, a bipartisan-supported bill that would restrict PBM-owned pharmacies from operating in the state. The state house still needs to vote on this bill.