UnitedHealth Group reported third-quarter results on Tuesday, October 13, before the market opened. Adjusted earnings: $4.69 per share, up 60.6% from the year-ago quarter, and GAAP earnings of $4.56 per share, up 76.1%. Revenue, on the other hand, fell 0.4% to $112.7 billion. The company raised its full-year adjusted EPS guidance to at least $20.50.
There may be errors or inaccuracies. Found something that looks wrong? Write to me and I will fix it.
What Was Reported
| Q3 2026 | Q3 2025 | Change | |
|---|---|---|---|
| Revenue | 112,694 | 113,161 | -0.4% |
| Of which: premiums | 87,078 | 88,979 | -2.1% |
| Earnings from operations | 6,563 | 4,315 | +52.1% |
| Operating margin | 5.8% | 3.8% | +2.0 pts |
| Net earnings | 4,110 | 2,348 | +75.0% |
| Diluted EPS, GAAP ($) | 4.56 | 2.59 | +76.1% |
| Adjusted EPS ($) | 4.69 | 2.92 | +60.6% |
| Medical care ratio | 88.4% | 89.9% | -1.5 pts |
| Operating cost ratio | 12.8% | 13.5% | -0.7 pts |
In millions of dollars, except per-share amounts and ratios. Adjusted earnings are a non-GAAP measure. Source: the company's results announcement, October 13, 2026. Percentage changes were recomputed from the figures in the announcement.
The Medical Care Ratio Fell, and Revenue Did Not Rise
Premiums, the core of revenue, fell 2.1% to $87.1 billion. Product revenue rose 7.5% to $14.3 billion, and services revenue rose 5.0% to $10.2 billion. The announcement does not present organic growth. And still, earnings from operations jumped 52.1% to $6.56 billion.
What did it was the ratios. The medical care ratio (MCR) fell to 88.4% from 89.9% a year earlier, and the operating cost ratio fell to 12.8% from 13.5%. The announcement notes net favorable prior-period reserve development of $610 million, related to 2026 dates of service, which affected the medical care ratio. In the second quarter the amount was $860 million. CEO Stephen Hemsley credited the results to the discipline and execution of the teams across every part of the business, and said the company is simplifying how it serves patients and clinicians.
Against the second quarter the picture is different: adjusted EPS fell 26.5%, from $6.38 to $4.69, and earnings from operations fell 17.9%, from $7.99 billion to $6.56 billion. The medical care ratio rose to 88.4% from 86.7%, and the net margin fell to 3.6% from 4.9%. Revenue rose 0.6%, from $112.0 billion in the second quarter.
The Segments: UnitedHealthcare and Optum
UnitedHealthcare earned $2.83 billion from operations, versus $1.81 billion a year earlier (up 56.8%), on revenue of $86.3 billion, down 0.8%. The operating margin rose to 3.3% from 2.1%. By line: Employer & Individual brought in $20.2 billion (up 1.7%), Medicare & Retirement $42.4 billion (down 2.2%), and Community & State $23.7 billion (down 0.6%).
The number of people UnitedHealthcare serves in medical coverage stood at 48.3 million, versus 50.1 million a year earlier and 48.5 million in June. On Medicare Advantage: the announcement says the seniors the company serves contracted by 935,000 since year-end 2025, under a definition that also includes complex populations in Medicaid. In the people-served table itself the plan shows 7.605 million, versus 8.445 million at year-end 2025 - a decline of 840,000.
Optum earned $3.73 billion from operations, versus $2.51 billion (up 48.7%), on revenue of $66.9 billion, down 3.3%, and a margin of 5.6% versus 3.6%. At Optum Health revenue fell 9.9% to $22.9 billion, but earnings from operations rose to $735 million from $41 million. At Optum Insight revenue rose 2.9% to $5.47 billion and earnings to $1.28 billion, versus $920 million. At Optum Rx revenue rose 0.6% to $39.9 billion and earnings to $1.72 billion, versus $1.55 billion, while adjusted scripts fell 5.1%, to 393 million from 414 million. The year-ago figures for Optum Health and Optum Insight are shown as recast in the announcement, following a realignment of Optum Financial.
From GAAP to Adjusted, and Commitments
Adjusted earnings are 13 cents above GAAP earnings, $4.69 versus $4.56. The bridge: to net earnings of $4,110 million you add $373 million ($0.41 per share) of intangible amortization, and remove two gains. The first, $148 million ($0.16 per share), is gains on businesses held for sale and an asset sale, net of a $76 million loss in South America. The second, $74 million ($0.08), is a $95 million decrease in loss-contract reserves, net of $21 million of valuation losses on equity securities. The tax effect of the adjustments removes another $33 million. The result: $4,228 million, or $4.69 per share.
Over nine months the company booked a $400 million contribution to the United Health Foundation, funded by a gain on an Optum Insight disposal. The announcement also lists two commitments that are not charges in the quarter: $1 billion to the foundation, and a rebate of 2026 individual ACA profits to about one million members. According to the announcement, further commitments are expected in 2027.
Cash Flow, the Balance Sheet and Shareholder Returns
Operating cash flow in the quarter was $5.1 billion, 1.2 times net earnings according to the announcement. Against the year-ago quarter that is a decline of 13.8% - a calculation from the release, from the difference between nine months and the first half in both years. Over nine months, operating cash flow stands at $25.1 billion, versus $18.6 billion, up 35.0%.
The debt-to-capital ratio rose to 41.7% from 41.2% in the second quarter. Days claims payable were 47.0, versus 46.2 a year earlier. Over nine months the company repurchased $5.0 billion of shares and paid $6.2 billion in dividends, and the diluted share count fell to 902 million from 908 million.
The Outlook
The company raised its 2026 adjusted EPS guidance to at least $20.50, from a range of $19.50-$20.00 given on July 16. The new floor is 50 cents above the top of the previous range and 3.8% above its midpoint. GAAP EPS guidance rose to at least $19.50, from a range of $18.45-$18.95. The guidance implies GAAP net earnings of more than $17.65 billion (in July: more than $16.75 billion) and adjusted net earnings of more than $18.6 billion.
The announcement does not include explicit fourth-quarter guidance. taking the new floor less the $18.30 accumulated over nine months, the fourth quarter requires at least about $2.20 adjusted and about $2.00 GAAP - approximate, because of changes in the share count.
The announcement includes no further outlook table, so it is impossible to tell from it whether the other July guidance items - among them the full-year medical care ratio, earnings from operations, operating cash flow and the tax rate - still stand.
Versus Expectations, and the Stock
According to an LSEG analyst survey published by CNBC, expectations were for adjusted earnings of $4.14 per share and revenue of $111.40 billion. The reported $4.69 is 55 cents higher, 13.3%, and revenue of $112.69 billion is 1.2% higher. According to StreetAccount, also cited by CNBC, the expected medical care ratio was 89.9%, versus 88.4% actual.
The stock opened up 5.1% on report day, and during the session gave up all of the gain: it closed at $377.76, down 0.20%.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
What interests me in this report is the distance between the two lines. Revenue fell 0.4%, and earnings from operations rose 52.1%. The profit did not come from growth but from a ratio: for every premium dollar the company paid 88.4 cents on care, versus 89.9 a year earlier, and operating costs fell as well.
There are two ways to read this. One, it is pricing discipline: the company is willing to serve fewer people - 48.3 million versus 50.1 million - in order to earn more from each of them, and the guidance raise is consistent with that continuing. Two, part of the improvement rests on $610 million of favorable reserve development, and the second quarter, with adjusted earnings of $6.38, shows how far the current quarter is from the year's peak. The new floor requires a fourth quarter of at least about $2.20, and that is a lower bound, not a forecast. The same numbers support both readings, and the market, which opened up 5.1% and finished almost unchanged, apparently did not decide between them.
(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)
Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.
