UnitedHealth reported a second-quarter medical cost ratio - the percentage of premiums spent on medical care - of 86.70%, better than analysts' average estimate of 88.47% and the year earlier's 89.4%.
The company said its insurance plan design changes and new pricing on products led to an improvement in the medical cost ratio.
Its health insurance unit, UnitedHealthcare, reported second-quarter revenue of $86 billion, compared with $86.1 billion in the same quarter last year, while overall revenue rose to $112 billion from $111.6 billion. That beat analyst expectations of about $111 billion, according to LSEG.
Higher costs for insurance, however, drove a membership decline, particularly for people purchasing plans through the Obamacare marketplace, where extra pandemic-era government subsidies expired, said DeVeydt.
UnitedHealthcare expects 500,000 people to disenroll from Obamacare plans in 2026, DeVeydt said.
Still, the company has kept its overall revenue outlook for 2026 unchanged at $439 billion, DeVeydt said.
On a yearly basis, second-quarter operating income for Optum jumped 29% to $4 billion, driven by improved operations at its technology segment and better access to care in its clinical unit.
In the previous quarter, Optum's earnings had dragged as its operating income fell 15% year-over-year to $3.3 billion.
The AI tools the company has introduced this year have reduced the administrative burden and increased the amount of time Optum Health clinicians can spend treating patients, DeVeydt said.
"We said, with Optum Health, this would be a multi-year journey to return to historical growth levels and margins," said DeVeydt, who expects revenue growth to fully return in 2028. "I would say we are ahead of schedule in year one."
UnitedHealth this year pulled back on Medicare Advantage offerings for older adults and Optum exited less favorable contracts for coordinated care plans.
The company last year said Optum faced regulatory and cost challenges, representing an $11 billion blow to the unit over three years.
On an adjusted basis, UnitedHealth earned $6.38 per share in the second quarter, compared with an average analyst estimate of $4.90.
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