UnitedHealth Group Profits Eclipse $6 Billion As Medical Costs Ease

UnitedHealth Group reported first quarter net income of $6.3 billion as medical costs fell a bit, triggering an improved outlook for the rest of the year.

The company, which is the parent of the nation’s largest health insurer in UnitedHealthcare, raised its full year 2026 earnings outlook to “greater than $17.35 per share,” compared to an earlier forecast of “greater than $17.10 per share.”

“The first quarter 2026 medical care ratio was 83.9% compared to 84.8% in the first quarter 2025,” the company said of the ratio, which is the percentage of premium revenue that goes toward medical costs. “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.”

UnitedHealth reported net income of $6.28 billion, or $6.90 per share in the first quarter ended March 31 of this year, compared to $6.29 billon, or $6.85 per share in the year ago quarter. Total company revenues grew 2% to $111.7 billion as the company grew certain Optum businesses including its pharmacy benefit unit OptumRx and benefitted from “repricing” of health insurance products across all of the health plans it sells.

Medical loss ratios have risen to 90% and above for several health insurance companies as claims pile up from doctors and hospitals seeing an influx of patients with a pent up demand for medical care. In UnitedHealth’s fourth quarter of last year, the insurer’s medical care ratio was 91.5%. The industry would prefer such ratios to be below 90% and into the mid 80s where the industry was less than two years ago.

UnitedHealthcare’s improving medical cost picture comes in part due to decisions by new management to exit unprofitable markets where the company has sold individual coverage under the Affordable Care Act also known as Obamacare as well as pulling out of scores of counties where the company no longer sells privatized Medicare Advantage plans. Health insurers including UnitedHealthcare, CVS Health’s Aetna, Humana and Elevance Health all have been struggling to contain medical expenses of a record number of older adults enrolled in Medicare Advantage plans.

The exits from these markets contributed to a loss of health plan members with UnitedHealthcare serving 49.1 million people in the first quarter of this year compared to 49.8 million people at year-end 2025. “Seniors served through Medicare Advantage, including programs serving complex populations included in Medicaid, declined by 965,000 in the first quarter 2026,” UnitedHealth Group said in its earnings report.

Still, UnitedHealthcare revenues rose to $86.3 billion in the quarter compared to $84.6 billion in the first quarter 2025 as growth in the health insurer’s “employer self-funded offerings partially offset by attrition in both group fully-insured and individual products.”

“UnitedHealthcare’s first quarter 2026 earnings from operations were $5.7 billion compared to $5.2 billion in the first quarter 2025,” the company said in its earnigs report. “Operating margin of 6.6% compared to 6.2% in the first quarter 2025, primarily due to repricing across all lines of business in response to cost trends that remain elevated but in line with expectations.”