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By Brian Nelson, CFA
On January 27, UnitedHealth Group (UNH) reported mixed results for its fourth quarter of 2025 with non-GAAP earnings per share coming in-line with expectations, but revenue missing the mark. Consolidated revenues for 2025 were $447.6 billion, representing 12% year-over-year growth. For 2025, earnings from operations were $19 billion, and the company posted a net margin of 2.7%, while cash flow from operations was $19.7 billion, or 1.5x net income. For 2025, UnitedHealthcare expanded revenues 16%, while Optum expanded revenues 7% on the year. Full year adjusted net earnings were $16.35 per share.
Management had the following to say about the results:
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 2026 outlook reflects a business delivering durable performance improvement and margin expansion through greater operating discipline and precise execution.
For 2025, UnitedHealth Group’s reported medical care ratio was 89.1%, while its adjusted medical care ratio came in at 88.9%, an increase of 340 basis points year-over-year. The year-over-year increase reflects Medicare funding reductions, changes from the Inflation Reduction Act, and accelerating medical cost trends. Its adjusted operating cost ratio of 12.9% was flat year-over-year. Management is focused on key markets, products, and geographies, while it aligns its pricing discipline to account for higher medical trends and the impact of health care policy changes. “Re-baselining” operations at Optum is also a key goal.
UnitedHealth’s outlook for 2026 wasn’t as strong as many had been expecting. The company is targeting full year 2026 revenue to be greater than $439 billion, compared to full year 2025 revenue of $447.6 billion and consensus of $456 billion–representing the first forecasted annual decline in decades. Its consolidated medical care ratio is expected to improve 30 basis points, to 88.8% +/- 50 basis points, relative to 89.1% last year, as it reprices business across the enterprise. Its operating cost ratio is expected to improve 10 basis points in the year.
For 2026, earnings from operations are expected to be greater than $24.0 billion on an operating margin of 5.5%. Its net margin is anticipated to be 3.6% for 2026, improving from its 2025 net margin of 2.7%. 2026 adjusted earnings are targeted to be greater than $17.75 per share, roughly in-line with consensus estimates, while cash flow from operations is targeted to be greater than $18.0 billion. UnitedHealth Group has been a big loser in the newsletter portfolios the past year, but we think the time to remove it from the newsletter portfolios has passed. Disappointing reimbursement rates proposed by the Trump administration for Medicare Advantage payers in 2027 is also weighing on shares. Shares yield 2.5%.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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