UnitedHealth (UNH) Stock Jumps 6% as Earnings Crush Estimates

TLDR

• UNH reported Q1 adjusted EPS of $7.23, beating the $6.58 estimate, with revenue of $111.7 billion vs. $109.4 billion expected.
• The stock rose 5.7% to $342 in premarket trading Tuesday.
• Full-year adjusted EPS guidance raised to over $18.25, up from $17.75 in January.
• Medical care ratio improved to 83.9% in Q1 2026, down from 84.8% a year ago.
• UnitedHealth plans at least $1.5 billion in AI investment to offset a $6 billion Medicare reimbursement headwind.

UnitedHealth Group posted a strong first quarter, clearing Wall Street estimates on both earnings and revenue while lifting its full-year outlook. The results come as the company continues its turnaround effort under CEO Stephen Hemsley, who returned to lead the company last May.

Q1 adjusted earnings came in at $7.23 per share, well above the $6.58 consensus estimate. Revenue hit $111.7 billion, topping forecasts of $109.4 billion. Net income for the quarter was $6.28 billion, or $6.90 per share.

The stock jumped 5.7% to $342 in premarket trading Tuesday.

UnitedHealth Group Incorporated, UNH

Full-year adjusted EPS guidance was raised to more than $18.25, up from $17.75 projected in January. CFO Wayne DeVeydt told Barron’s the company would likely wait until after Q2 to consider further revisions. “We’d like to just see a few more months get under our belt,” he said.

UnitedHealthcare revenues grew to $86.3 billion in the quarter, up from $84.6 billion in Q1 2025. Operating margin came in at 6.6%, up from 6.2% a year ago.

Medical Costs Show Improvement

One of the cleaner signals in the report was the medical care ratio — the percentage of premium revenue spent on medical costs. It dropped to 83.9% in Q1 2026 from 84.8% in Q1 2025. That’s a meaningful shift after the ratio hit 91.5% in Q4 2025.

The company attributed the improvement to cost management and favorable reserve development. Elevated utilization and unit cost trends still partially offset the gains.

UnitedHealth has been pulling back from unprofitable markets, including individual ACA plans and certain Medicare Advantage counties. That contributed to a drop in members — from 49.8 million at year-end 2025 to 49.1 million in Q1 2026. Medicare Advantage enrollment fell by 965,000 in the quarter.

Optum and AI Investment

UnitedHealth is putting at least $1.5 billion into AI this year. The company says those investments are helping tackle a $6 billion headwind from prior Medicare reimbursement changes. DeVeydt said the payback window on AI initiatives is “very short.”

Earlier this month, the Medicare agency confirmed an average 2.48% pay increase for insurers next year. UNH stock had already climbed 9% on that news. DeVeydt acknowledged the bump “didn’t fully address” current medical trends, and that benefit cuts will still be needed in 2026.

Morgan Stanley upgraded UNH to a “top pick” on April 16, citing expectations for a “string of clean quarters” following the more favorable Medicare rate announcement.

UnitedHealthcare’s employer self-funded business offset some of the membership losses, with the insurer’s OptumRx pharmacy benefit unit also contributing to overall revenue growth.

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