UnitedHealth Earnings on Deck – Stock Down Big on Medicare Advantage News

UnitedHealth Group stock (NYSE:UNH) is 9% lower ahead of earnings, under pressure overnight.

The company reports earnings before the opening bell. The quarter closes a year in which the company suspended full-year guidance for the first time since 2008, cut profit expectations three times, and saw shares fall over 30% from peak levels. Consensus sits at $2.81 EPS and $113.1B revenue, but the backward-looking numbers are secondary to what management signals about 2026 earnings power and medical cost trajectory.

The immediate constraint is the Trump administration's January 2026 proposal for Medicare Advantage payment rates in 2027, which calls for a 0.09% increase versus Street expectations of 4-6% and eliminates certain billing practices under federal scrutiny. The announcement triggered an 8% after-hours selloff, underscoring the degree to which forward reimbursement assumptions drive valuation. Management's ability to articulate a path to margin expansion despite this headwind will determine whether the stock can hold its current 18.3x P/E multiple.

The quarter also provides the first read on whether the operational actions management outlined in Q3 (Optum Health site footprint adjustments, contracting discipline, Medicare Advantage pricing actions) are flowing through to margins. UnitedHealth's role as a sector bellwether means the guidance will shape expectations across managed care, particularly for companies with similar Medicare Advantage exposure.

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Consensus Estimates

The Q4 EPS estimate of $2.81 sits roughly in line with the implied fourth-quarter figure from management's full-year floor of at least $16.25, leaving minimal room for a beat to surprise positively unless revenue or margin execution exceeds the low bar. The 60.7% year-over-year EPS decline reflects the comparison against Q4 2024's $7.15 result, before the Medicare Advantage utilization shock and Optum Health member-profile surprise forced three successive guidance cuts through 2025.

Management Guidance and Commentary

“We are taking decisive actions to improve Optum Health's profitability, including adjusting our care delivery footprint and enhancing our contracting discipline. These steps, combined with our Medicare Advantage pricing actions for 2026, position us to return to earnings growth next year.”

Management's October 28, 2025 commentary framed the full-year 2025 floor of at least $16.25 as a stabilization point rather than a growth base, explicitly pointing to 2026 as the year earnings would resume an upward trajectory. The guidance raise from “at least $16.00” in July to “at least $16.25” in October was small in dollar terms but large in signal, as it marked the first time in 2025 that management moved the bar up rather than down.

UnitedHealthcare facility showing the scale of the company's operations across multiple business segments.

The credibility test is whether management can articulate a 2026 path that acknowledges the rate headwind while still delivering growth. A guide below $17.00 would signal that the 2025 reset was insufficient and that margin recovery will take longer than the October commentary suggested. A guide at or above $17.50 would require investors to believe that pricing actions, Optum footprint adjustments, and contracting discipline can offset both the rate cut and any residual medical cost trend pressure.

Analyst Price Targets & Ratings

Wall Street maintains a cautiously optimistic stance with 78% of analysts rating shares a Buy or Strong Buy. The consensus target of $393.77 implies 12% upside from current levels, though the range reflects varying assumptions about the speed of margin recovery and Medicare reimbursement impact.

Sector & Peer Comparison

UnitedHealth trades at an 18.3x trailing P/E and 17.8x forward P/E, a premium to every major managed care peer despite the 2025 execution issues. The valuation gap is widest against CVS Health (11.4x trailing) and Centene (10.8x), both of which carry their own operational challenges but trade at discounts that reflect lower profitability and weaker earnings visibility.

Earnings Track Record

UnitedHealth's 83.3% beat rate over the past 20 quarters and +2.4% average surprise reflect a historical pattern of conservative guidance and consistent execution, but the 2025 experience broke that mold. The company missed estimates in Q1 and Q2 2025, marking the first back-to-back misses in over a decade and the first guidance suspension since 2008.

Post-Earnings Price Movement History

The post-earnings movement pattern reveals that UnitedHealth's stock has become guidance-driven rather than results-driven. The Q2 2025 miss triggered a +5.5% rally because management re-established a full-year floor after suspending guidance in May, providing clarity that the market valued more than the quarterly shortfall.

UnitedHealth Group's corporate campus reflects the company's scale as the largest U.S. health insurer by market capitalization.

Expected Move & Implied Volatility

The options market is pricing a ±4.2% move for UNH following the earnings report, implying a range of $337 to $366 based on the current $351.64 price. The elevated IV reflects two primary uncertainties: the magnitude and tone of 2026 guidance, and management's commentary on the Medicare Advantage rate proposal.

Expert Predictions & What to Watch

Key Outlook: Guidance Will Drive the Trade

Key Metrics to Watch

The setup heading into this print is straightforward: the market is paying today for the October narrative and wants proof the recovery is on track. A clean beat likely requires 2026 guidance materially above $17.25 with credible commentary on how Medicare rate headwinds will be offset, otherwise it risks reading as “fully priced.”