Photo: Courtesy UnitedHealthcare
UnitedHealth Group on Tuesday reported full-year and fourth quarter 2025 results and issued its 2026 outlook.
Stocks fell in the premarket on Tuesday after the healthcare giant's Q4 revenue and full-year revenue outlook fell short of Street forecasts, according to Seeking Alpha.
The latest pressure comes from the Medicare Advantage Advance Notice on rates released Monday by the Centers for Medicare and Medicaid Services.
UnitedHealthcare CEO Tim Noel said, "The news in the Advance Notice was disappointing."
There's been $30 billion in funding reductions over three years, Noel said.
UnitedHealthcare planned for MA contraction in 2026, Noel said. That's 1.3 million to 1.4 million members.
"These are greater losses than originally anticipated," Noel said.
UnitedHealth will work with CMS until rates are finalized, but he indicated there could be benefit reductions for seniors.
This is the third year of Medicare reductions and rising cost trends, said UnitedHealth Group Chairman and CEO Stephen Hemsley. He indicated there could be further modifications to the insurer's MA footprint when he said the company would continue to strengthen areas that make sense and not areas "that no longer makes sense to us."
"We have removed assets that have not aligned in serving the U.S. health system," Hemsley said.
During the Q2 earnings call in July 2025, UnitedHealthcare said it would exit certain Medicare Advantage markets due to higher-than-expected medical costs. These were plans that served over 600,000 members.
Noel said Tuesday that the current Medicare cost trend of 10% was in line with expectations. Utilization remains high.
The strategy in 2026 is to focus more on margin than a membership target, he said.
"We feel good about margin recovery efforts," Noel said.
In Medicare supplemental coverage, there is a projected margin improvement of 50 basis points, Noel said.
In Medicaid, UnitedHealth Group is seeing business pressure from funding shortfalls, Noel said. There will be a projected contraction of 565,000 to 715,000 people in Medicaid.
Optum CEO Patrick Conway said Optum is seeing growth through broad-based AI innovation and the alignment of Optum Insight with Optum financial services. Optum Health expects earnings growth of 9%, he said.
Optum Health's integrated value-based care is driving down total cost of care by 30%, Conway said.
Hemsley said by statement, "We confronted challenges directly, and finished 2025 as a much stronger company, giving us the momentum to better serve those who count on us and continue to improve our core performance."
UnitedHealth Group's 2025 earnings from operations were $19 billion, and net margin was 2.7%, while cash flows from operations were $19.7 billion, or 1.5x net income, according to CFO Wayne DeVeydt.
Full-year 2025 revenues of $447.6 billion grew 12% year-over-year. The full-year 2026 revenue outlook is greater than $439 billion.
Email the writer: SMorse@himss.org