UnitedHealth Increases Full Year Earnings Forecast But Warns Of Tough Road Ahead For Medicaid Business

• UNH raised its full-year adjusted earnings guidance to at least $16.25 per share, up from its previous outlook of at least $16. 
• However, company executives warned on the company’s earnings call that the path to recovery in its Medicaid business will be challenging.
• They noted that medical cost trends remain historically high but consistent with the company’s second-quarter guidance. 

UnitedHealth Group (UNH) on Tuesday raised its full-year adjusted earnings guidance to at least $16.25 per share, up from its previous outlook of at least $16, as it seeks to return to growth in 2026.

“We remain focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond, and our results this quarter reflect solid execution toward that goal,” said CEO Stephen Hemsley.

“Simply put, we will end 2025 well-positioned for a return to solid growth in 2026, acceleration in 2027, and a clear focus on our long-standing mission and strategy,” the CEO noted during the company’s third quarter (Q3) earnings call, while adding that the company intends to share its 2026 full guidance in January with its fourth quarter (Q4) earnings.

Hemsley took over the reins of the company in May after former CEO Andrew Witty stepped down. He is also the chairman of UNH’s board of directors.

Execs Flag Concerns On Medicaid Business Recovery

However, company executives warned on the earnings call that the path to recovery for the company’s Medicaid business will be challenging. Medicaid is a joint federal and state program in the United States that provides low-cost or free health coverage to eligible low-income individuals.

“States have not funded in line with actual cost trends, so funding levels are not sufficient to cover the health needs of state enrollees. While we're making steady progress in bridging this gap with states, the mismatch between rate adequacy and member acuity will likely extend through 2026," Hemsley said, according to an earnings call transcript provided by Fiscal AI. A company executive also noted that the elevated cost trends in the business were driven by specialty pharmacy, behavioral health, and home health services in the third quarter.

UnitedHealth’s Q3 Numbers

For the third quarter, the company reported a 12% increase in consolidated revenue to $113.2 billion, above an analyst estimate of $113.06 billion, as cited by Fiscal AI.

Adjusted earnings per share came in at $2.92, above an expected $2.81.

Medical cost ratio, or the percentage of premiums used on medical care, was 89.9%, in line with the expectations put forth by the company in the second quarter (Q2). Company executives noted on the earnings call that medical cost trends remain historically high but consistent with its second quarter guidance, and the insurer expects that to continue throughout the remainder of 2025.

The company’s revenue from its key Optum business segment, meanwhile, grew 8% year-over-year to $69.2 billion.

Shares of the company traded 2% higher at the time of writing. On Stocktwits, retail sentiment around UNH stock jumped from ‘bearish’ to ‘extremely bullish’ territory over the past 24 hours, while message volume rose from ‘normal’ to ‘extremely high’ levels.

A Stocktwits user expressed optimism for the stock yielding significant profits in the future.

Another user resonated the sentiment.

UNH stock is down by 27% this year and by about 34% over the past 12 months. 

Read also: Tesla On The Look-Out For Manufacturing Engineer To Advance Its New Roadster Sports EV

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