UNITEDHEALTH GROUP INC (UNH) Q3 2025 Earnings Summary

Executive Summary

Q3 delivered revenue and EPS beats with 12% Y/Y revenue growth to $113.16B and adjusted EPS of $2.92 vs S&P Global consensus $2.81; GAAP EPS was $2.59. Management raised FY25 EPS outlook to at least $14.90 (GAAP) and at least $16.25 (adj). Cash from operations was $5.9B (2.3x net income). *
Margin pressure persisted: net margin fell to 2.1% (down ~390 bps Y/Y) as the medical care ratio (MCR) rose to 89.9% in line with Q2 commentary; operating income fell 50% Y/Y.
Segment divergence: UnitedHealthcare revenues +16% Y/Y, but operating margin down to 2.1%; Optum revenues +8% Y/Y, Optum Health operating earnings declined to $255M (1% margin) as Medicare funding cuts, elevated utilization, and V28 transition weighed. Optum Rx remained resilient with scripts of 414M.
2026 setup: UHC repricing largely complete; management expects MA margins to improve in 2026 with conservative benefits and plan exits, while Optum Health aims to offset ~half of the 2026 V28 headwind via contracting. Longer-term, they target stronger growth from 2027.

What Went Well and What Went Wrong

What Went Well
- Top-line and EPS beat; guidance raised: Revenue $113.16B and adjusted EPS $2.92 exceeded consensus, with FY25 EPS raised to at least $14.90 (GAAP) and $16.25 (adj). “Our results this quarter reflect solid execution toward [durable growth].” – CEO Stephen Hemsley. *
- UHC growth and operational execution: UHC revenues +16% Y/Y to $87.07B, serving 50.1M consumers domestically (+795k Y/Y); DCP improved sequentially to 46.2; cash from operations strong at $5.9B.
- Optum Rx resilience: Revenues +16% Y/Y to $39.68B; adjusted scripts 414M; EO quarter noted disciplined pricing and broader adoption of full rebate pass-through.
What Went Wrong
- Margin compression: Net margin 2.1% (–390 bps Y/Y), operating income –50% Y/Y to $4.32B; consolidated MCR 89.9% (+470 bps Y/Y) reflecting elevated trend, Medicare funding reductions, Part D changes.
- Optum Health underperformance: Operating earnings fell to $255M (1% margin) vs $2.16B (8.3%) a year ago, driven by funding cuts, elevated utilization, less aligned risk arrangements; value-based care membership mix and V28 transition also cited.
- 2026 Medicare and ACA headwinds: UHC expects ~1M MA membership contraction in 2026 as it prioritizes margin recovery through benefit cuts, plan exits and narrower networks; ACA rate actions imply significant enrollment reduction.

Financial Results

Consolidated performance vs prior periods and estimates

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($B)	$100.82	$111.62	$113.16 vs est $113.06*
Operating Income ($B)	$8.71	$5.15	$4.32
Net Margin (%)	6.0%	3.1%	2.1%
GAAP Diluted EPS	$6.51	$3.74	$2.59 vs est $2.81*
Adjusted Diluted EPS	$7.15	$4.08	$2.92

Segment results

Segment	Q3 2024	Q2 2025	Q3 2025
UnitedHealthcare Revenue ($B)	$74.85	$86.10	$87.07
UnitedHealthcare Op Income ($B)	$4.21	$2.08	$1.81
UnitedHealthcare Op Margin (%)	5.6%	2.4%	2.1%
Optum Revenue ($B)	$63.93	$67.23	$69.18
Optum Op Income ($B)	$4.50	$3.08	$2.51
Optum Op Margin (%)	7.0%	4.6%	3.6%
Optum Health Op Income ($B)	$2.16	$0.64	$0.26
Optum Insight Op Income ($B)	$0.79	$1.00	$0.71
Optum Rx Op Income ($B)	$1.54	$1.44	$1.55

KPIs and efficiency metrics

KPI	Q3 2024	Q2 2025	Q3 2025
Medical Care Ratio (MCR)	85.2%	89.4%	89.9%
Operating Cost Ratio	13.2%	12.3%	13.5%
Days Claims Payable	47.4	44.5	46.2
Days Sales Outstanding	18.6	19.9	18.6
Optum Rx Adjusted Scripts (M)	407	414	414
Optum Insight Backlog ($B)	$32.8	$32.1	$32.1
U.S. Medical Members (M)	49.33	50.12	50.13

Estimate source note: asterisked values are consensus estimates/actual comparisons from S&P Global. Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP Diluted EPS	FY 2025	≥ $14.65 (7/29/25)	≥ $14.90 (10/28/25)	Raised
Adjusted Diluted EPS	FY 2025	≥ $16.00 (7/29/25)	≥ $16.25 (10/28/25)	Raised
Revenue	FY 2025	$445.5B–$448.0B (7/29/25)	Not updated in Q3 release	—
Operating Cash Flow	FY 2025	~$16B (7/29/25)	$5.9B in Q3; reiterates FY ~$16B trajectory	Maintained trajectory
MCR (Full-year)	FY 2025	89.25% ±25 bps (7/29/25)	Trending toward lower end of prior range (Q3 commentary)	Qualitatively improved
Quarterly Dividend	Next Pay	$2.21 per share payable Dec 16, 2025	$2.21 per share	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Medicare Advantage pricing & margins	Elevated care activity drove higher MA trend; pricing for ~10% 2026 trend; margins in low end 2025, improving in 2026	Repricing on track; expect margin growth in 2026 with conservative benefits, plan exits; ~1M MA membership contraction expected	Focus shifts to margin over membership
V28 risk model headwind	V28 an $11B 3-year headwind at Optum Health; mitigation via contracting/ops; 2026 VBC margins ~1%	~50% of 2026 V28 headwind offset targeted via payer contracting; tighten networks, exit PPO	Executing offsets; narrower networks
Optum Health operations	Underperformance from member mix, elevated trend, contract design; cohort margin cadence outlined	Value-based margins ~1% in 2025; improvement expected 2026; long-term OHP margin 6–8%	Stabilizing 2026; rebuild to LT targets
AI/Technology (Optum Insight)	Launched AI RCM tools; strong pipeline; call routing AI adoption	Introduced Optum Real (real-time claims), Integrity One (AI auto-coding), Crimson AI; building AI-first platforms	Accelerating AI productization
Payment integrity & coding	Noted provider service intensity/coding practices; increasing audits	Addressing outliers via network actions, AI payment integrity; IDR monitored	Tighter policy enforcement
Capital allocation & leverage	Dividend increased in June; paused buybacks pending leverage; FY OCF ~$16B	Debt-to-cap 44.1%; targeting ~40% by 2H26; potential buyback resumption later in 2026; dividend unchanged practice	Balance sheet de-risking
Regulatory/Macro	Tariff risk manageable given protections; constructive CMS engagement	CMS engagement constructive; STARS improving; final V28 year in 2026 still a headwind	Navigating policy headwinds

Management Commentary

“We remain focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond.” – CEO Stephen Hemsley.
“Adjusted EPS of $2.92, slightly ahead of our expectations… we invested more than $450M in broad-based employee incentives and contributions to the UnitedHealth Foundation.” – CFO Wayne DeVeydt.
“Repricing within UnitedHealthcare is on track to drive solid operating earnings growth… in 2026… we expect MA membership contraction of approximately 1 million in total Medicare Advantage in 2026.” – UHC CEO Tim Noel.
“We are close to completion in over 90% of our value-based payer contracts for next year and are on track to offset approximately half of the 2026 V28 headwind through payer contracting… expect VBC membership to shrink ~10% in 2026 before returning to growth in 2027.” – Optum CEO Patrick Conway.
“Optum Insight… launched Optum Real… Integrity One… and Crimson AI… evolving to AI-first services, products, and platforms.” – OI leader Sandeep Dadlani.

Q&A Highlights

MA membership outlook: ~1M contraction split between 600k from product exits and the rest evenly between Group MA and Individual MA due to disciplined pricing and competitor actions.
Dividend/capital: Dividend practice unchanged; priority on deleveraging toward ~40% debt-to-cap; buybacks/strategic M&A may resume later in 2026.
Medicaid trajectory: 2025 breakeven; 2026 trough at negative 1% to negative 1.7% margins; pathway to ~2% rated margins over 18–24 months as rates catch up to acuity.
Commercial trend/pricing: 2025 trend ~11%; double-digit pricing into 2026 with margin recovery progress; Surest and integrated advocacy products gaining traction.
Coding/service intensity: Elevated intensity (site of service, add-on services, specialist rounding); response includes network actions and AI-enabled payment integrity; IDR monitored.

Estimates Context

Q3 revenue and EPS both beat S&P Global consensus: Revenue $113.16B vs $113.06B*; GAAP EPS $2.59 vs $2.81*; Adjusted EPS $2.92 (no consensus shown for adj); EBITDA $5.41B vs $5.18B*. *
Forward consensus implies: Q4’25 revenue ~$113.42B*, EPS ~$2.08*; Q1’26 revenue ~$113.61B*, EPS ~$6.56*. Values retrieved from S&P Global.*

Key Takeaways for Investors

Beat-and-raise quarter amid ongoing margin repair: modest top-line/EPS beats and raised FY25 EPS should support sentiment; watch execution on 2026 margin recovery (MA repricing, benefit tightening).
Margin headwinds are cyclical and policy-driven, not structural to the enterprise: management is prioritizing profitability over growth (MA exits, narrower networks), with 2026 improvement and 2027 acceleration targeted.
Optum Health stabilization is critical: 2025 value-based margins ~1% with ~10% membership reduction planned; contracting/ops expected to offset ~half of 2026 V28 headwind; longer-term 6–8% segment margin target intact.
Optum Insight’s AI stack is a stealth catalyst: multiple AI-first launches (claims, coding, clinical analytics) can expand mix and margins; expect stepped-up investment near-term, payoffs in 2027+.
Capital return on the horizon post-deleveraging: debt-to-cap at 44.1% with path to ~40% by 2H26 suggests buybacks could resume later in 2026; dividend held steady ($2.21 next pay).
Watchlist: 2026 MA bids/benefit designs, Medicaid rate adequacy, payment integrity actions, V28 final-year offsets, Optum Health network rationalization, and AI product commercialization.

Footnote: asterisked figures reflect S&P Global consensus/estimate data. Values retrieved from S&P Global.