What UnitedHealth Group’s earnings call reveals about managed care trends

UnitedHealth Group reported that 2025 earnings grew revenue 12% to $447.6 billion compared with 2024, with an adjusted earnings per share of $16.35, which was slightly ahead of expectations.

For 2026, the company is expecting full-year revenue to come in slightly lower, at $439 billion, but projects adjusted earnings per share of over $17.75, representing growth of at least 8.6%.

In an earnings call this morning, CEO Stephen Hemsley said moves the company made beginning in the second half of 2024 will position the company for positive growth this year and next.

“As we enter 2026, we’ve taken a critical look across all our products and our U.S. market position, focusing on what is working, what needs more attention and what no longer makes sense for us,” he said.

Hemsley rejoined the company in May 2025 after former CEO Andrew Witty stepped down. Hemsley had served as CEO from 2006 to 2017. During Witty’s tenure, the company experienced several challenging events, including the February 2024 cyberattack on the company’s claims processing subsidiary, Change Healthcare, and the December 2024 killing of Brian Thompson, the CEO of the company’s insurance unit UnitedHealthcare. Additionally, an investigation of the company’s Medicare Advantage practices by the Department of Justice began in early 2025.

Hemsley and other executives during the call addressed how the company is addressing several key industry trends that are likely to impact other health insurers. These include a a focus on technology, especially AI, pressures in the Medicare and Medicaid businesses, and focus on rebuilding trust through transparency measures.

A focus on AI

The Minneapolis-based company announced plans to invest nearly $1.5 billion in artificial intelligence and machine learning capabilities this year. Hemsley said this effort is part of a “new age of technology” that will fundamentally reshape healthcare delivery. The AI investments are already generating results, with the company projecting nearly $1 billion in operating cost reductions for 2026.

“We are clearly embarking on a new age of technology, already transforming the way the world operates, and healthcare must participate carefully and fully," Hemsley told analysts during the call. “We plan to be a leader in that movement.”

The technology deployment extends across UnitedHealth Group’s operations, from customer service to clinical care. More than 80% of member calls now leverage AI tools to answer questions faster, executives said. The company has also consolidated its Optum Health provider groups onto just three electronic medical record systems, down from 18, enabling swifter adoption of AI-enhanced workflow tools.

“We are capitalizing on significant AI automation-enabled operating efficiencies to support our expanded margin outlook,” Patrick Conway, CEO of Optum, a business of UnitedHealth Group, said during the call.

Within Optum, Conway said the first new product will be through the use of broad-based AI to strengthen the Optum care provider market, offering an important change starting in 2026 involves aligning Optum Insight and Optum Financial Services. “These businesses have a much greater synergy today. For example, integrating Optum real AI driven revenue cycle solutions with Optum Financial Services, payment and financing capabilities have the potential to transform healthcare transactions, moving the industry from post service reconciliation to real-time, point-of-care approval, creating a more modern, closed-loop approach.”

Optum Health is also undergoing significant operational restructuring, with a refocusing on integrated value-based care and cutting its affiliated provider network by nearly 20%. Conway said the change to better align payment models that incentivize improved outcomes and preventive care over volume-based services.

Transparency efforts

UnitedHealth Group has committed to publishing detailed performance metrics across its operations, including prior authorization and claim approval rates, rebate practices, pricing data, and business management policies.

“We are methodically taking steps to advance greater trust and transparency wherever we serve the public healthcare interest,” Hemsley said.

The initiative follows independent reviews of business practices in pharmacy services and care management that were completed in December 2025. The reviewers, FTI Consulting and the Analysis Group, provided recommendations for strengthening and enhancing protocols, specifically with regard to risk assessment with Medicare Advantage and Optum Rx’s policies and processes for ensuring prescription drug manufacturer discounts are accurately collected and distributed to clients.

Hemsley said that additional independent oversight reviews will continue throughout 2026. During the year, the company will share the results of other review, including prior authorization and claim approval rates, certain performance statistics, data and trends, rebate practices and prices for products and services and core management practices and policies.

Within Optum Rx, Conway said the segment has implemented new pricing models that will deliver greater transparency to customers and cost-based reimbursement to pharmacies. The company has also removed reauthorization requirements for 180 drugs. More than 95% of the company’s customers have elected to receive full rebate pass-through in 2026, with all remaining customers expected to transition by the end of 2027.

“We will continue to expand these efforts, and we continue to advance our commitment to pass through 100% of drug rebates we receive to our customers,” Conway said. “Our customers recognize pharmacy benefits are an essential tool in helping employers, governments, and patients afford and access medication.”

Medicare and Medicaid

Medicare Advantage has been a challenging space for UnitedHealth Group. Three consecutive years of Medicare funding reductions totaling $130 billion have led to a pivot for the company. In July 2025, UnitedHealth Group executives said rising medical costs and lower-than-expected earnings led the company to exit some Medicare Advantage plans for 2026, most of them being preferred provider organizations (PPOs).

During the 2025 open enrollment period, the company saw lower-than-expected enrollment, and the company expects to lose between 1.3 million and 1.4 million Medicare members in 2026.

Additionally, just yesterday, CMS issued an advance notice on payment rates for fiscal year 2027 Medicare Advantage and Part D plans. If finalized, the net average year-over-year payment increase will be just 0.09%. CMS Administrator Dr. Mehmet Oz said the rate is to “ensure beneficiaries continue to have affordable plan choices and reliable benefits.”

But UnitedHealthcare executive Tim Noel, CEO of the company’s Medicare and retirement division, said the rate increase was disappointing and warned that the healthcare cost trend of about 10% is much higher than the payment increase.

“This will mean very meaningful benefit reductions, and we’ll once again need to take a hard look at our geographic footprint and our product footprint across the country,” Noel said. ‘Seniors across the sector are going to experience implications of reduced choice, reduced access, and affordability challenges.”

The Medicaid business is facing similar challenges, and UnitedHealthcare expects to lose 565,000 to 715,000 enrollees this year. While the company has secured some rate increases — projected at 6% to 7% for the year — these remain below medical cost trends, creating ongoing margin compression.

Affordable Care Act exchanges

Healthcare affordability, especially on the Affordable Care Act (ACA) exchange plans, has gained much attention over the last few months. Enhanced subsidies were enacted during the COVID-19 public health emergency and extended through the end of 2025 by the Inflation Reduction Act. The loss of the enhanced subsidiaries is expected to increase costs for enrollees at a time when health insurance premiums in general are climbing for a variety of reasons.

The loss of the enhanced subsidiaries is expected to increase costs for enrollees at a time when health insurance rates as a whole are going up. This is because of rising healthcare costs, inflation, labor and provider costs and tariffs, according to a Peterson KFF Health System Tracker. The rising cost of medications, especially with specialty drugs, is also contributing to this trend.

ACA insurers are raising rates on average by 26% for 2026, but in states that use Healthcare.gov, premiums are rising on average by 30%, according to a recent analysis from KFF. But enrollees who had previously qualified for enhanced subsidies, monthly premium payments are expected to more than double, increasing by about 114%, a different KFF analysis finds.

UnitedHealthcare serves about 1 million members through Affordable Care Act (ACA) exchange plans in about 30 states. Last year, the insurer repriced its ACA plans across to address higher medical trends and elevated beneficiary needs. This, however, contributed to membership losses of approximately 500,000 people in the individual exchange market alone.

Last week, however, Hemsley said the company will rebate its profits this year to members who receive healthcare coverage through these plans. He testified before Congress last week about the high costs and access to healthcare.

“We are working with CMS on solutions to address the consumer affordability challenge given the unfolding dynamics in the ACA marketplace,” Noel said. “We have voluntarily pledged to rebate ACA market profits back to our ACA customers this year as policymakers work to determine how to improve affordability in this marketplace, and we expect both fully insured group and individual enrollment to contract and be partially offset by continued momentum in our group.”