UNITEDHEALTH GROUP INC (UNH) Q2 2025 Earnings Summary

Executive Summary

Adjusted EPS was $4.08, below S&P Global consensus of ~$4.45; revenue was $111.6B, modestly above ~$111.58B consensus. Consolidated medical care ratio (MCR) rose to 89.4% (up 430 bps YoY), reflecting medical cost intensity outpacing pricing and ongoing Medicare funding cuts . Consensus values retrieved from S&P Global.
UNH re-established 2025 guidance materially lower: net EPS at least $14.65 (from $24.65–$25.15), adjusted EPS at least $16.00 (from $26.00–$26.50), and revenue $445.5–$448.0B (from $450–$455B). Full-year MCR now 89.25% ±25 bps; operating cost ratio 12.75% ±25 bps .
Management detailed remediation and a “tone of change and reform,” including 2026 Medicare Advantage pricing set to ~10% trend and exiting plans covering >600K members, with a focus on narrower networks and disciplined managed products .
Discrete Q2 impacts totaled ~$1.2B, including a $620M ACA exchange premium deficiency reserve; dividend was raised 5% to $2.21 in June, with Q2 capital returns of $4.5B .

What Went Well and What Went Wrong

What Went Well

Optum Insight improved operating margin to 20.7% (Q2) and backlog stood at $32.1B; recovery from change healthcare cyber event is progressing, albeit slower than initially expected .
Optum Rx revenue grew 19% YoY to $38.5B, with script volume rising to 414M; earnings modestly increased (~$200M full-year expected), despite specialty and launch headwinds .
CEO emphasized “a tone of change and reform” and proactive regulatory engagement to modernize operations, strengthen compliance, and improve transparency .

What Went Wrong

Adjusted EPS fell YoY and missed consensus; MCR climbed to 89.4% (up 430 bps YoY), driven by higher unit costs and service intensity beyond pricing assumptions . Consensus values retrieved from S&P Global.
Optum Health revenue declined ~$1.8B YoY to $25.2B and operating margin compressed to 2.5% (from 7.1%); management cites mis-execution on V28, mix of complex/new patients, and underpriced capitation .
Discrete items of ~$1.2B (incl. $620M ACA premium deficiency reserve) weighed on results; guidance reset sharply lower across EPS and revenue for FY25 .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$100.8	$109.6	$111.6
GAAP Diluted EPS ($)	$5.98	$6.85	$3.74
Adjusted Diluted EPS ($)	$6.81	$7.20	$4.08
Net Margin (%)	5.5%	5.7%	3.1%
Operating Cost Ratio (%)	14.1%	12.4%	12.3%
Consolidated Operating Margin (%)	7.7%	8.3%	4.6%

Medical Care Ratio trend

Metric	Q1 2025	Q2 2025
Medical Care Ratio (%)	84.8%	89.4%

Segment performance

Metric	Q2 2024	Q1 2025	Q2 2025
UnitedHealthcare Revenues ($B)	$73.9	$84.6	$86.1
UnitedHealthcare Operating Earnings ($B)	$4.0	$5.2	$2.1
UnitedHealthcare Operating Margin (%)	5.4%	6.2%	2.4%
Optum Revenues ($B)	$62.9	$63.9	$67.2
Optum Operating Earnings ($B)	$3.9	$3.9	$3.1
Optum Operating Margin (%)	6.2%	6.1%	4.6%

Optum sub-segment detail

Metric	Q2 2024	Q1 2025	Q2 2025
Optum Health Revenues ($B)	$27.1	$25.3	$25.2
Optum Health Operating Earnings ($B)	$1.9	$1.6	$0.6
Optum Insight Revenues ($B)	$4.5	$4.6	$4.8
Optum Insight Operating Earnings ($B)	$0.5	$1.0	$1.0
Optum Rx Revenues ($B)	$32.4	$35.1	$38.5
Optum Rx Operating Earnings ($B)	$1.4	$1.3	$1.4

KPIs

Metric	Dec 31, 2024	Mar 31, 2025	Jun 30, 2025
UHC Total Medical People Served (000s)	49,345	50,125	50,115
Medicare Advantage (000s)	7,845	8,245	8,350
Medicaid (000s)	7,435	7,570	7,490
Medicare Supplement (000s)	4,335	4,310	4,305
Part D Standalone (000s)	3,050	2,835	2,800
Optum Insight Backlog ($B)	$32.8	$32.9	$32.1
Optum Rx Adjusted Scripts (MM)	422	408	414

Note: Adjusted EPS is non-GAAP; see reconciliation in the earnings release for adjustments (intangible amortization, cyberattack costs, South America impacts) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue ($B)	FY 2025	$450–$455	$445.5–$448.0	Lowered
Net EPS ($)	FY 2025	$24.65–$25.15	At least $14.65	Lowered
Adjusted EPS ($)	FY 2025	$26.00–$26.50	At least $16.00	Lowered
Medical Care Ratio (%)	FY 2025	87.5% ±50 bps	89.25% ±25 bps	Higher (worse)
Operating Cost Ratio (%)	FY 2025	—	12.75% ±25 bps	Set
Operating Margin (%)	FY 2025	—	4.8%–5.0%	Set
Cash from Operations ($B)	FY 2025	$32–$33	~$16	Lowered
Dividend (per share)	Quarterly (June)	—	$2.21 (+5%)	Increased

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
AI/technology initiatives	Launched AI claims tools; digital engagement up; call routing improvements	Scaling AI across plan operations; driving $~1B 2026 cost reductions; focus on AI-first modernization	Accelerating
Medicare funding/coding (V28)	Year 2 V28 pressure; plan exits impacting Optum member profiles	V28 headwind sized ~$11B over 3 years ($7B by 2025); execution missteps and offsets planned for 2026	Headwind persists, mitigation underway
Medical cost trend	MA care activity 2x vs 2024 in Q1	2025 MA trend ~7.5%; 2026 pricing assumes ~10% trend	Rising
ACA exchange/market dynamics	Individual exchange attrition on pricing competitiveness	$620M premium deficiency reserve; accelerated recognition of anticipated H2 losses	Deteriorated
Medicaid rates & acuity	Gap narrowing via renewals; optimistic on 2025	Expect negative margins non-dual Medicaid (~–1% to –1.7%) in 2026; rate lag persists	Deteriorating near term
Regulatory/legal posture	PBM reform transparency and pass-through commitment	Cultural shift toward proactive regulator engagement; external stakeholder trust rebuild	More proactive

Management Commentary

“More than anything, it is a tone of change and reform... a real cultural shift in our relationship with regulators and all external stakeholders” — Stephen Hemsley, CEO .
“Our current view for 2025 reflects $6.5 billion more in medical costs than we anticipated... ~$3.6B Medicare, ~$2.3B commercial, remainder Medicaid” — Tim Noel, CEO UnitedHealthcare .
“Optum Health earnings in 2025 are approximately $6.6 billion below our expectations... V28 created an ~$11 billion headwind over three years” — Patrick Conway, CEO Optum .
“Adjusted EPS of $4.08... includes about $1.2B in discrete items... $620M related to the individual exchange business” — John Rex, CFO .
“Our adjusted earnings outlook is at least $16 per share... revenues will approach $448 billion... full-year MCR 89.25% ±25 bps” — John Rex .

Q&A Highlights

Run-rate and EPS bridge into 2026: Management acknowledged ~$5 EPS in H2’25 plus ~$1 from discrete items, with substantial repricing impact on Jan 1 across 80% of premiums; MA margins targeted to 2.5–3% in 2026, midpoint by 2027 .
Medicare Advantage strategy: Significant 2026 benefit reductions and plan exits (~600K members, particularly PPO), pricing for ~10% trend; aim for disciplined HMO risk and improved capitation across payers .
Medicaid outlook: Non-dual Medicaid expected to run negative margins in 2026 (–1% to –1.7%) amid rate lag and elevated behavioral trend (~20%) .
Discrete settlements: Granular breakdown across segments (~$850M UHC; ~~$500M Optum Health; couple hundred million Insight; <~~$100M Rx), reflecting receivables collectibility and disputed items .
M&A/capabilities: Continued commitment to home-health and ASC footprint; progressing Amedisys transaction and home-based care as foundational to VBC .

Estimates Context

Metric	Q2 2025
Revenue Consensus Mean ($USD Billions)	$111.58*
Actual Revenue ($USD Billions)	$111.62
Primary EPS Consensus Mean ($)	$4.45*
Actual Adjusted EPS ($)	$4.08
Primary EPS – # of Estimates	22*
Revenue – # of Estimates	18*

Values retrieved from S&P Global.

Key Takeaways for Investors

FY25 reset is severe: guidance reductions across EPS, revenue, and MCR point to a multi-quarter reset; watch execution on remediation and pricing into 2026 .
Cost trend remains the core risk: MA trend ~7.5% in 2025 and ~10% pricing assumption for 2026; intensity per encounter is the driver, not just utilization .
V28 remains a large headwind: ~$11B over 3 years, ~$7B realized by 2025; offsets partially via benefit cuts, plan exits (~600K), capitation improvements, and cost discipline .
Optum Insight strength is a bright spot: margins ~20.7% and backlog ~$32.1B support medium-term thesis on tech-enabled efficiency; potential AI-driven product launches ahead .
ACA exposure is painful near-term: $620M PDR accelerates H2 losses; 2026 exchange participation to be more conservative with potential market exits .
Medicaid likely a 2026 drag: non-dual expected negative margins given rate/acuity mismatch; ongoing state engagement is key to normalization .
Capital returns continue, but balance sheet prudence: dividend increased to $2.21 and $4.5B Q2 returns; CFO flagged balancing buybacks, credit rating, and Amedisys closing .