By Amina Niasse
NEW YORK, Oct 13 (Reuters) – UnitedHealth Group on Tuesday raised its 2026 profit forecast and indicated that Wall Street’s current estimate for 2027 earnings was too low, saying it would build on restrained medical-cost spending in its health insurance business and improved margins in clinical care.
The company has been in turnaround mode for the past two years after it suffered one of the biggest cyber attacks on the industry, missed financial targets and was forced to withdraw its outlook. It was also rattled by the killing of a top executive outside the company’s investor meeting in New York nearly two years ago.
UnitedHealth, which operates one of the largest US health insurance companies, clinical care businesses, pharmacy services and a pharmacy benefits manager, now expects 2026 adjusted profit per share of at least $20.50. That is up from its previous forecast of at least $19.50 to $20, and above analysts’ estimates for $19.86 per share, according to LSEG data.
For 2027, Chief Financial Officer Wayne Deveydt said the company is targeting the lower end of its long-term growth rate projection of 13% to 16% as a “reasonable starting point.”
“Current analyst consensus for 2027 may understate the opportunity ahead,” he said.
Wall Street analysts are estimating earnings of $22.61 per share for next year.
While UnitedHealth delivered a solid quarter, the real highlight was the continued durability of the margin recovery story, said Mizuho analyst Ann Hynes.
UnitedHealth shares were up 2.1% at $386.61 in early trading.
On an adjusted basis, UnitedHealth earned $4.69 per share for the third quarter, up from $2.92 a year earlier, and well above the average analyst estimate of $4.14.
COST CONTROLS
UnitedHealth reported a third-quarter medical cost ratio — the percentage of insurance premiums spent on medical care — of 88.4%, better than analysts’ estimates and the year-ago 89.90%.
The company attributed the improvement to plan design and new pricing on products. It has exited some health insurance products this year and has named new top executives after missing financial estimates last year.
A $610 million reserve benefit reduced medical costs during the quarter, reflecting lower-than-expected medical cost claims for services provided earlier this year, the company said.
Revenue from its UnitedHealthcare insurance business fell to $86.3 billion from $87.1 billion a year earlier, even as earnings from operations and profit margins rose due to benefit changes, pricing, and medical- and operating-cost controls.
UnitedHealthcare operates Medicare Advantage health insurance plans for adults aged 65 and older and also runs Medicaid plans for low-income Americans on behalf of state governments.
The company said UnitedHealthcare membership declined in its employer-sponsored health plan business by 165,000 people due to attrition and that another 85,000 people left the Medicaid rolls due to eligibility changes.
Since the end of 2025, 935,000 members have exited its Medicare Advantage business.
Third-quarter operating income for UnitedHealth rose to $6.6 billion from $4.3 billion in the year-ago quarter, largely driven by improved operations in its Optum Health clinical unit.
UnitedHealth said technology investments, including on artificial intelligence, have reduced the overall costs of providing medical services. Optum also exited less favorable contracts for certain health plans that had dragged on earnings in the first quarter.
The company last year said Optum faced regulatory and cost challenges, representing an $11 billion blow to the unit over three years.
Overall third-quarter revenue of $112.69 billion beat analyst expectations of about $111.4 billion.
(Reporting by Amina Niasse in New York, and Sneha S K and Christy Santhosh in Bengaluru; Editing by Caroline Humer, Sonali Paul, Shinjini Ganguli and Bill Berkrot)
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