UnitedHealth shares fall as company warns of lower revenue

27th Jan 2026 12:50

(Sharecast News) - UnitedHealth reported a solid set of full-year results on Tuesday, but warned that revenue was set to fall in 2026 as the company pressed ahead with a broad restructuring aimed at restoring profitability after a period of elevated medical costs and operational disruption.

The US healthcare giant posted 2025 revenue of $447.6bn, up 12% year-on-year, with adjusted earnings of $16.35 per share.

Earnings from operations fell to $19.0bn from $32.3bn a year earlier, reflecting a $2.8bn pre-tax charge tied to the final costs of the Change Healthcare cyberattack, portfolio divestitures, restructuring and loss contract assessments.

Reported net earnings were $13.23 per share.

Cash flow from operations came in at $19.7bn, exceeding expectations due to favourable timing effects.

Fourth-quarter results showed the impact of those charges more clearly, with reported earnings from operations dropping sharply, although adjusted earnings per share of $2.11 narrowly beat Wall Street expectations.

Revenue of $113.2bn was slightly below consensus forecasts.

The group's medical care ratio rose to 89.1% in 2025 from 85.5% in 2024, driven by higher utilisation, Medicare funding reductions and Inflation Reduction Act impacts, though that was still better than many peers and ahead of market expectations.

UnitedHealthcare, the insurance arm, grew revenue 16% to $344.9bn, serving 49.8 million people, but saw operating earnings fall sharply as margins were squeezed by higher medical trends and policy changes affecting Medicare and Medicaid.

Optum's revenue increased 7% to $270.6bn, though profits declined, with Optum Health in particular hit by reimbursement pressure and elevated costs, while Optum Rx delivered stronger growth on higher prescription volumes and pharmacy services.

Looking ahead, UnitedHealth forecast 2026 revenue of more than $439bn, implying a 2% year-on-year decline and marking the group's first annual revenue contraction in decades.

Management said the drop reflected deliberate "right-sizing", including overseas divestitures, the sale or closure of parts of Optum Health's care delivery network, and an expected overall US membership decline of more than three million people, with losses across commercial, Medicare and Medicaid plans.

The company also highlighted the final year of Medicare's new V28 risk-coding transition, which it said would reduce revenue by around $6bn.

Despite the lower revenue outlook, UnitedHealth said it expected profitability to improve in 2026.

It guided for earnings from operations of more than $24bn and adjusted earnings per share above $17.75, slightly ahead of analyst estimates.

The medical care ratio was forecast to improve to around 88.8%, supported by repricing actions, while the operating cost ratio is expected to edge lower as productivity initiatives take hold.

The cautious outlook rattled investors, particularly against the backdrop of proposed flat Medicare Advantage payment rates from US regulators, which had intensified pressure across the sector.

Shares in UnitedHealth fell sharply following the guidance, extending a steep decline over the past year.

Management, however, said the restructuring would leave the company with a smaller footprint, fewer members and a stronger focus on margins, positioning it for more sustainable growth beyond 2026.

At 0742 ET (1241 GMT), shares in UnitedHealth Group Incorporated were down 16.1% in premarket trading in New York at $294.99.

Reporting by Josh White for Sharecast.com.