UnitedHealth's stock falls 20% after saying it expects revenue to decline in 2026

By Jaimy Lee

The health insurer was also surprised by a very small Medicare Advantage rate proposal

UnitedHealth's stock tumbled after a lower 2026 revenue outlook came along with disappointing Medicare Advantage rates announced by the Trump administration.

UnitedHealth Group's stock closed 19.6% lower on Tuesday after the healthcare giant said it expects revenue to decline this year, while it was also caught off-guard by a lower-than-expected rate increase for Medicare Advantage.

The health insurer (UNH) anticipates that revenue will drop at least 2% in 2026 to "greater than $439 million," while the FactSet analyst consensus was $454.2 billion in 2026. It also guided for adjusted earnings per share of least $17.75 and a medical-care ratio of 88.8% in 2026.

It's been a challenging year for UnitedHealth. Medical spending is "historically high" for medical cost trends, according to comments made in October by Tim Noel, CEO of the UnitedHealthcare division. The company is also facing several civil and criminal investigations into its Medicare business. CEO Andrew Witty resigned in May, and several other senior leaders have moved on.

"We confronted challenges directly and finished 2025 as a stronger company," UnitedHealth CEO Stephen Hemsley said in a statement.

UnitedHealth is also facing lower-than-expected Medicare Advantage rates after the Trump administration proposed Monday that it will only increase those rates to insurers by 0.09% in 2027. Last year, it raised rates by 5.06%. Shares of UnitedHealth and other insurers dropped sharply Tuesday, dragging down the Dow Jones Industrial Average DJIA.

"The news that we received last night in the advanced notice was disappointing," Noel said during Tuesday's earnings call with analysts, "and it was because it's a further reduction for a program that has experienced $130 billion in ... funding reductions."

Oppenheimer's Michael Wiederhorn described the proposed rate as coming in "well below expectations and inflationary trends."

UnitedHealth's medical-care ratio, which is the percentage of health-insurance premiums that it spends on medical care, came in better than expected. It was 88.9% in 2025, up from 85.5% in 2024, and beat the FactSet estimate of 92.1%.

"This reflects consistently elevated utilization in addition to increases in physician fee schedules and the continuation of higher service intensity per care encounter," Noel said.

Medical spending increases for several reasons, including higher spending by Medicare Advantage members, rising drug costs, Medicare cuts and growing healthcare utilization across the board. It's also a concern for competitors like CVS Health (CVS) and Elevance Health (ELV), which are expected to have medical-care ratios that top 92% in the fourth quarter, according to FactSet estimates.

UnitedHealth reported net earnings of $218 million in the fourth quarter, down from $2.8 billion in the same period a year ago. Adjusted EPS was $2.11 in the fourth quarter, versus the FactSet consensus of $2.10.

The company also disclosed a charge of $1.6 billion, or $1.78 a share, citing $799 million in "final cyberattack costs" as a result of the Change Healthcare breach in 2024 and $2.5 billion in restructuring costs. The company also reported a $442 million gain from "portfolio divestitures."

Its revenue came in 12.3% higher to $113.2 billion, against a FactSet estimate for $113.8 billion.

The quarterly revenue for UnitedHealthcare, the company's insurance business, was $87.1 billion, up from $74.1 billion a year ago and beating the FactSet consensus of $86.7 billion. Its Optum business, which includes its provider and pharmacy-benefit manager segments, had revenue of $70.3 billion, up 8% from the $65.1 billion it reported a year ago; the FactSet estimate was $68.3 billion.

UnitedHealth's stock has fallen 48% over the past year, while the S&P 500 SPX has gained 16%.

-Jaimy Lee

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01-27-26 1728ET