UnitedHealth Group Turnaround Gains Steam as Medicare, Optum Trends Improve

UnitedHealth Group Turnaround Gains Steam as Medicare, Optum Trends Improve

UnitedHealth Group NYSE: UNH executives said the company’s turnaround remained on track, citing continued strength in Medicare Advantage, Medicaid performance that is tracking toward the favorable end of expectations, and operational improvements at Optum Health. Speaking at an investor conference, CFO Wayne DeVeydt said the company’s outlook had not changed since its second-quarter earnings report. He said management is optimistic about 2026 but is increasingly focused on the pace of improvement heading into 2027 and 2028.

“Trajectory of things continue to be positive,” DeVeydt said, pointing to Medicare performing better than expected, Medicaid tracking in line with expectations and Optum Health’s ongoing turnaround. He also noted continuing pressure in commercial insurance stemming from the independent dispute resolution, or IDR, process.

In Medicare Advantage, he said UnitedHealth’s first-half performance supported its expectation of landing in the upper half of its previously stated 2% to 4% margin range for the year. The company had repositioned its product portfolio entering the year, making what DeVeydt described as difficult decisions on product durability and sustainable margins. Management expects its pricing and benefits to be competitive for 2027, he said. The company has made benefit-design changes in some markets and continues to rightsize products selectively. DeVeydt said those changes had affected customer experience measures, including CAHPS scores, but management believed they were necessary. On Medicare Star ratings, DeVeydt said the company improved all four pharmacy metrics and improved 10 of 12 HEDIS metrics, while the other two remained stable. CAHPS performance declined as expected following benefit changes, he said.

UnitedHealth expects Medicaid margins to be closer to a 1.1% loss than a 1.7% loss this year, DeVeydt said. The company had previously projected a negative margin range of 1.1% to 1.7%. He said the primary Medicaid issue had been funding rates rather than broad medica...