UnitedHealth Group stock rose more than 5 percent Thursday after the company reported Q2 adjusted earnings of $6.38 per share, blowing past the $4.90 analyst consensus by 30 percent, on revenue of $112 billion against the $110.85 billion estimate.
The company simultaneously raised its full-year 2026 adjusted earnings guidance to $19.50 to $20.00 per share, up from its prior outlook of more than $18.25 per share. Cash flow from operations guidance was raised to approximately $24 billion from $18 billion.
The beat was driven by two things: better control of medical costs and stronger performance at Optum, the health services arm that generated $65.7 billion in revenue and expanded its margins by 160 basis points year over year.
The company's medical care ratio, the percentage of premiums paid out in claims — improved to 88.1 percent versus prior guidance of 88.8 percent, meaning medical costs came in lower than feared.
The membership picture is more complicated. UnitedHealthcare served 48.5 million people in Q2, down 525,000 from Q1, as higher premiums driven by rising healthcare costs are pushing members out of both ACA exchange plans and Medicare Advantage.
CFO Wayne DeVeydt was frank about it: "It's not a good thing for the system long term." The company expects to lose roughly 1.1 million Medicare Advantage members and 500,000 ACA members in 2026 overall.
The company is spending $1.5 billion on AI to streamline operations and has been exiting unprofitable contracts to stabilize margins. The strategy is working on the earnings line even as it shrinks the member count.