Earnings Call Insights: UnitedHealth Group (UNH) Q3 2025
Management View
- CEO Stephen Hemsley reported “introducing new leaders, strengthening underperforming businesses, identifying both opportunities and inefficiencies and importantly, recommitting to the mission and culture of this company.” Hemsley emphasized urgency and a focus on core underperformance issues, noting “repricing within UnitedHealthcare is on track to drive solid operating earnings growth from margin improvement within that business in 2026.”
- Hemsley stated, “In our less mature businesses such as Optum Health and Optum Insight, our efforts to improve operations and make needed investments will show more measured progress in 2026 and will take more time to fully bear fruit.”
- Hemsley confirmed ongoing management changes, including the appointment of Wayne DeVeydt as CFO, and referenced “recent Medicare STARS scores showing improvement year-over-year.”
- Hemsley indicated, “We are dedicating our energies to serving U.S. health care needs and we’ll be reducing our footprint in international markets that do not support these needs,” and previewed a “non-GAAP substantially noncash low single-digit billion-dollar charge” related to strategic review and operational consolidation.
- Wayne DeVeydt, Chief Financial Officer, stated, “Today, we reported adjusted earnings per share of $2.92, which was slightly ahead of our expectations. These results reflect steady execution while we work through our longer-term improvement plans.”
Outlook
- Management indicated that “current analyst consensus captures a likely stepping off point for next year,” with formal 2026 guidance to follow in January. Hemsley stated, “We intend to balance our earnings growth ambitions in 2026 with investments and actions that will drive higher and sustainable double-digit growth beginning in 2027 and advancing from there.”
- Timothy Noel, CEO of UnitedHealthcare, said, “Trend experience for the third quarter continues to validate the actuarial forecasts underpinning our 2026 pricing actions. Taken together, these actions position each of our businesses on a clear path towards margin growth in 2026 with the exception of Medicaid.”
- Noel added, “We expect membership contraction of approximately 1 million members in total Medicare Advantage, including individual and group markets” for 2026, linked to “targeted plan exits and network reductions to offset elevated medical trends and government funding decreases.”
- Optum Health expects margin improvement in 2026 and “further acceleration in 2027 towards our long-term margin targets of 6% to 8%,” according to Patrick Conway, CEO of Optum Rx.
Financial Results
- Wayne DeVeydt reported, “We delivered revenues of over $113 billion, reflecting 12% year-over-year growth driven by domestic membership expansion of over 780,000 lives year-to-date.”
- The company ended the third quarter with “total domestic membership of more than 50 million.”
- Medical care ratio was “89.9% in the quarter compares to 85.2% in the same quarter last year, with the full year trending towards the lower end of the projections we offered last quarter.”
- Operating cost ratio of 13.5% reflected “larger investments in technology and people than originally contemplated when guidance was set in 2Q.” Investments included over $450 million in employee incentives and UnitedHealth Foundation contributions.
- Operating cash flow from operations was $5.9 billion, with full-year expected to close at $16 billion.
Q&A
- Joshua Raskin, Nephron Research: Asked about Optum Health revenue mix and membership. Patrick Conway responded that “65% VBC, 15% care delivery fee-for-service and 20% are payer, employer services. Within VBC, it’s about 2/3…serving UnitedHealthcare.” Krista Nelson added, “anchored and committed to the long-term potential of this business, the 6% to 8% margin…and within that, the 5% commitment to our value-based care agenda.”
- Albert Rice, UBS: Inquired about Optum Insight’s competitive position and investments. Sandeep Dadlani highlighted new AI offerings such as Optum Real, Optum Integrity One, and Crimson AI, stating, “We’re investing…in building, growing new products and offerings, and I’m incredibly excited about the possibilities.”
- Justin Lake, Wolfe Research: Sought clarity on commercial margin recovery. Timothy Noel confirmed “expect 2026 as a year where we’re probably still 150 basis points below that low end of the margin” with “longer-term margin range of 7% to 9%…attainable.”
- Stephen Baxter, Wells Fargo: Asked about Medicare Advantage membership declines. Robert Hunter detailed “approximately 1 million membership contraction for 2026 across MA…pretty evenly split between the pressure inside of our group MA business…and our individual MA business.”
- Lisa Gill, JPMorgan: Questioned utilization trends. Noel said, “utilization, really tracking in line with the expectations that we called out in last quarter’s call, really across all of the product lines.”
Sentiment Analysis
- Analysts displayed a neutral to slightly negative tone, focusing on specifics around margin recovery, membership declines, investment levels, and strategic direction.
- Management maintained a measured confidence in prepared remarks, using phrases such as “we are confident…we will ensure we are focused on activities that align with our long-term future.” In the Q&A, management was candid about headwinds and operational challenges, but reiterated confidence in margin recovery and growth targets.
- Compared to last quarter, analyst tone remained cautious, while management’s tone shifted from humility and acknowledgment of missteps to a more assertive, solution-focused stance.
Quarter-over-Quarter Comparison
- Guidance language became more specific, with explicit mention of an anticipated 1 million Medicare Advantage membership contraction in 2026 and targeted margin improvement timelines.
- Strategic focus has shifted to repricing, portfolio rationalization, and operational consolidation, with further clarity on Optum Health’s return to core value-based care principles.
- Analysts continued to probe for details on membership, margins, investment needs, and the pace of recovery, while management displayed increased confidence in navigating headwinds and executing recovery strategies.
- Key metrics such as revenues and EPS improved quarter-over-quarter, driven by strong domestic membership and targeted investments.
- Management tone moved towards proactive engagement, emphasizing execution and performance discipline. Analyst sentiment remained probing but less skeptical than the previous call.
Risks and Concerns
- CEO Hemsley noted “continued headwinds in 2026 from the third year of nearly $50 billion in industry-wide Medicare cuts by the previous administration as well as Medicaid funding and program pressures.”
- Timothy Noel highlighted that “path to recovery will be more challenging” in Medicaid, with “funding levels…not sufficient to cover the health needs of state enrollees” and margin degradation expected in 2026.
- Patrick Conway described operational inconsistencies in Optum Health, risks from provider network size, and misaligned risk acceptance as requiring “significant leadership changes” and portfolio exits.
- Analysts raised concerns about the impact of provider coding practices, the pace and sustainability of margin recovery, further portfolio rationalizations, and the implications of membership declines.
Final Takeaway
UnitedHealth Group management highlighted concrete actions to drive margin recovery and growth in 2026, including aggressive repricing, portfolio consolidation, and a renewed focus on value-based care and operational discipline. While 2025 remains a transition year with ongoing headwinds, leadership is confident that targeted plan exits, disciplined investments, and a sharpened U.S. market focus will support a return to sustainable double-digit growth, beginning with margin improvements in 2026 and accelerating in 2027.