UPDATED: Jan. 27 at 12:15 p.m. ET
UnitedHealth now expects to lose between 1.3 million and 1.4 million Medicare Advantage members in 2026 across group, individual and dual special needs plans.
Tim Noel, CEO of UnitedHealthcare, said during the company's fourth quarter earnings call on Tuesday that the membership losses exceeded the company's initial expectations because "competitive market dynamics drove higher than expected plan shopping during the intensely competitive annual enrollment period."
"Our 2026 approach favored margin recovery and these membership trends are a result of these actions," Noel said.
He said the company took a similarly disciplined approach to pricing in Medicare supplement and standalone Part D plans, and as a result of this effort is expecting to see improved margins for 2026 compared to 2025 across its Medicare products.
Noel's comments come less than a day after the Centers for Medicare & Medicaid Services released proposed rates for the 2027 plan year, with the proposal largely flat compared to 2026. Major insurance organizations like AHIP have warned that these rate filings, if finalized, could force payers to rethink benefits and which markets they operate in.
Noel echoed that commentary in his own remarks, saying the proposed Advance Notice "simply doesn't reflect the reality of medical utilization and cost trends."
"We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors' benefits and access to care," Noel said. "That would be a deeply unfortunate result for a program that already is under funding pressure from the previous administration, despite its track record of success serving seniors and taxpayers."
UnitedHealth also expects to see some membership losses in the Medicaid space, predicting a decline of between 565,000 and 715,000 people, including D-SNP enrollees, Noel said.
He said that the company is seeing improvements in the "mismatch" between Medicaid rates and the acuity of care for enrollees, but it's expecting that cost pressure to carry into 2027.
The insurer conducted a broad repricing effort in 2025 as part of its push to turnaround underperforming businesses, and that aligned its employer plan prices as well as Affordable Care Act exchange offerings with the current cost environment. Noel said that UnitedHealth expects to see contraction in its fully insured and individual plans that is offset, at least in part, by growth among self-funded plans.
"While this will drive margin expansion in 2026, we still anticipate operating just slightly below our historical margin range until 2027," Noel said.
PUBLISHED: Jan. 27 at 7:35 a.m. ET
UnitedHealth Group's shares tumbled premarket as the company reported $10 million in profit for the fourth quarter of 2025.
The figure did surpass Wall Street's expectations, according to Zacks Investment Research, but shares in the company were down by about 16% ahead of market open. Health insurers with a significant presence in Medicare Advantage did take a hit late Monday after the Trump administration revealed a proposal for flat rates in 2027.
By comparison, UnitedHealthcare posted $5.5 billion in profit for the fourth quarter of 2024. For full-year 2025, profits were $12.1 billion, down from the $14.4 billion haul the company reported in 2024.
Revenues in the fourth quarter were $113.2 billion, increasing from the $100.8 billion reported in the prior-year quarter. UnitedHealth fell short of Wall Street's projections on revenue, per Zacks.
Full-year 2025 revenues were $447.6 billion, up from the $400.3 billion reported in 2024.
Elevated utilization and medical costs continued to ding the company, both in the fourth quarter and throughout 2025. For the fourth quarter, UHG reported a medical loss ratio of 92.4% and a full-year MLR of 89.1%.
CEO Stephen Hemsley said in a press release that the company's overall performance in the year reflects the progress it's made in a broad turnaround effort. That work has focused on three areas, according to the announcement: centering key markets and products; disciplined pricing to account for escalating medical costs; and a new approach at the top at Optum.
"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," Hemsley said.
Full-year revenue at UnitedHealthcare grew by 16% to $344.9 billion as membership grew by 415,000 to 49.8 million. The operating margin at the insurance arm decreased from 5.2% in 2024 to 2.7% due to Biden-era changes in Medicare funding, the effects of the Inflation Reduction Act and rising medical costs.
At Optum, revenues grew 7% to $270.6 billion in 2025, with revenues at Optum Health in particular down by 3%. However, Optum Rx saw full-year revenue growth of 15%, easing some of the sting of the challenges at the care delivery business.
In its 2026 outlook, the healthcare giant expects medical cost pressures to continue and estimates a full-year MLR of 88.8%.
The company also expects to slim its revenue to $439 billion in 2026 as it focuses on turnaround efforts. It projects more than $335 billion in revenue at UnitedHealthcare and more than $257.5 billion in revenue from Optum, as well as $153.5 billion in revenue pulled from the system through "eliminations."
UHC's revenue estimates reflect a decline in enrollment, with the company projecting full-year membership of between 46.9 million and 47.5 million. Optum is expected to see corresponding membership decreases at Optum Rx, and revenue guidance also reflects the "strategic right-sizing" of Optum Health, according to the report.
UnitedHealth also expects earnings per share of at least $17.75 for the full year.
Chief Financial Officer Wayne DeVeydt said the outlook "reflects a business delivering durable performance improvement and margin expansion through greater operating discipline and precise execution."