This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Fortune AIQ 50

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

UnitedHealth Group is a diversified health care company. Its four main segments are UnitedHealthcare, which offers health care coverage to employers, small businesses, and individuals; Optum Health, which provides health care delivery and management; Optum Insight, which sells health care software and provides data analysis and consulting services; and Optum Rx, which offers pharmacy benefits management and other pharmacy services. Founded in 1974, UnitedHealth has grown rapidly, organically, and through acquisitions; it was the largest U.S. health care company by revenue in 2024.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

Fortune Sector Leaders: Health Care

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-UnitedHealth Group

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The health insurance and health care services provider brought in $324.2 billion in revenue in 2022, making it the largest company in the U.S. health care sector.\n\n–As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.\n–Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.\n–In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.&quot;}" data-sheets-userformat="{&quot;2&quot;:771,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:16770457},&quot;11&quot;:4,&quot;12&quot;:0}">The health insurance and health care services provider brought in $324.2 billion in revenue in 2022, making it the largest company in the U.S. health care sector. 
<ul> 
 	<li><span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The health insurance and health care services provider brought in $324.2 billion in revenue in 2022, making it the largest company in the U.S. health care sector.\n\n–As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.\n–Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.\n–In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.&quot;}" data-sheets-userformat="{&quot;2&quot;:771,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:16770457},&quot;11&quot;:4,&quot;12&quot;:0}">As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.</li> 
 	<li><span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The health insurance and health care services provider brought in $324.2 billion in revenue in 2022, making it the largest company in the U.S. health care sector.\n\n–As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.\n–Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.\n–In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.&quot;}" data-sheets-userformat="{&quot;2&quot;:771,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:16770457},&quot;11&quot;:4,&quot;12&quot;:0}">Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.</li> 
 	<li><span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The health insurance and health care services provider brought in $324.2 billion in revenue in 2022, making it the largest company in the U.S. health care sector.\n\n–As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.\n–Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.\n–In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.&quot;}" data-sheets-userformat="{&quot;2&quot;:771,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:16770457},&quot;11&quot;:4,&quot;12&quot;:0}">In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.</li> 
</ul>

The 300 companies on this list are transforming industries from the inside out.

F500-2020-008-United-Health-Car

UnitedHealthcare and Optum are the main subsidiaries of UnitedHealth Group.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-United Health

The health insurance and health care services provider sits at No. 5 for a third consecutive year. The company’s $324.2 billion in revenue in 2022 made it the largest Fortune 500 company in the health care sector. 
<ul> 
 	<li>As of the end of Q1 2023, UnitedHealthcare, the company’s insurance arm, served nearly 2 million more people than a year earlier, for a total of 52.9 million.</li> 
 	<li>Revenue per consumer served in UnitedHealth’s Optum health services division increased 34% in Q1 2023 over the same quarter a year earlier.</li> 
 	<li>In March 2023, the U.S. Justice Department dropped an appeal that challenged UnitedHealth Group’s $8 billion acquisition of data analytics company Change Healthcare.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

G500-2022-11-UnitedHealth Group

UnitedHealth Group maintains its status as the largest health insurance provider in the U.S., and 2021 was a year of significant growth. The company served 2.2 million more people than in the previous year and saw a 12% rise in revenue year over year, to $287 billion. Pharmacy benefits management company Optum, one of UnitedHealth’s subsidiaries, delivered a 33% increase in revenue per consumer. Adding a 16th company to its vast portfolio of acquisitions, UnitedHealth bought Golden Valley–based health insurer PreferredOne to compete for business in its home state of Minnesota.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 UnitedHealth Group

UnitedHealth Group maintains its status as the nation’s largest health insurance provider, and 2021 was a year of significant growth. The company served 2.2 million more people than in the previous year and saw a 12% rise in revenue year over year, to $287 billion. Pharmacy benefits management company Optum, one of UnitedHealth’s subsidiaries, delivered a 33% increase in revenue per consumer. Adding a 16th company to its vast portfolio of acquisitions, UnitedHealth bought Golden Valley–based health insurer PreferredOne to compete for business in its home state of Minnesota.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-50-UnitedHealth

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-008-UnitedHealth Group

The Minnesota-based health insurer thrived during the pandemic year, climbing two spots on the list. While widespread layoffs led to a decline in the number of individuals covered by its commercial insurance, the firm’s 6.2% revenue growth was powered by greater enrollment in its Medicare Advantage and Medicaid plans, and by the strong performance of Optum, its sprawling $136 billion health services business. Despite the costs of covering COVID patients, UnitedHealth’s profits jumped 11.3%, owing to members’ decreased use of health services during the pandemic. In an abrupt leadership change, Andrew Witty, who previously ran the company’s Optum division, became CEO in February 2021.

This year’s Fortune 500 marks the 67th running of the list.

F500 2021-05-UnitedHealth

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-015-UnitedHealth-Group

The largest health insurer in the U.S. fired on all cylinders in 2019, with a 7% increase in annual revenues that brought the company's haul to $242 billion. Its UnitedHealthcare division grew by $10 billion last year, but the insurer's real and not-so-secret weapon continues to be its Optum unit, which provides an array of health care services including data analytics and pharmacy benefits management. Optum revenues climbed 12% year-over-year, to $113 billion. UnitedHealth Group also has considerable ambitions for its Medicare Advantage business, which had its best-ever enrollment last year, adding 325,000 elderly Americans.

This year's Fortune 500 marks the 66th running of the list.

The nation’s largest health insurer fired on all cylinders in 2019, with a 7% increase in revenues that brought the company to a total of $242 billion. Its UnitedHealthcare division grew by $10 billion last year, but the insurer's real not-so-secret weapon continued to be its Optum unit, which provides an array of health care services including data analytics and pharmacy benefits management. Optum revenues climbed 12% year-over-year to $113 billion. UnitedHealth Group also has considerable ambitions for its Medicare Advantage business, which had its best-ever enrollment last year, adding 325,000 elderly Americans.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

UnitedHealth Group is a Minnetonka, Minnesota-based health-care and insurance company founded in 1974. It operates through two platforms: UnitedHealthcare, which provides employer-sponsored, individual, Medicare, Medicaid, and other health-benefit plans; and Optum, a health-services business comprising Optum Health, Optum Insight, and Optum Rx. Optum delivers and supports care, provides technology, data, analytics, and consulting services, and operates pharmacy-benefit management and pharmacy-care businesses. UnitedHealth Group has expanded through organic growth and acquisitions and reported $447.6 billion in revenue in 2025.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

UnitedHealth Group (UNH): Company Profile, Stock Price, News, Rankings

legacy

UnitedHealth Group

unitedhealth group

Good morning, and welcome to the UnitedHealth Group Second Quarter twenty twenty five Earnings Conference Call. As a reminder, this call is being recorded. Here are some important introductory information. This call contains forward looking statements under U. S.

Federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non GAAP amounts. A reconciliation of the non GAAP to GAAP amount is available in the Financial and Earnings Reports section of the company's Investor Relations page at www.unitedhealthgroup.com.

Information presented on this call is contained in the earnings release we issued this morning and in our Form eight ks dated 07/29/2025, which may be accessed from our Investor Relations page of the company's website. I will now turn the conference over to the Chairman and Chief Executive Officer of UnitedHealth Group, Stephen Hemsley.

Thank you. Good morning, and thank you for joining. Today, our prepared remarks will be a little longer than usual, so we will be allowing more time for your questions. As we begin, I want to recognize and thank our employees who have been so dedicated to serving our patients, consumers and customers during a prolonged challenging period for our business. And I'd like to thank our leadership team, many of whom are new in their roles, for their willingness to join me in looking hard at our businesses, getting a grounded assessment of our action plans, rebaselining our outlook, and moving to pace to advance the performance of each of our businesses.

This morning, I know you are eager to get into the underlying details of our revised financial outlook, which we will do. But at this moment, I believe it's also important to convey the tone we're setting at this enterprise. More than anything, it is a tone of change and reform or out of recommitment to our mission to help people live healthier lives and help make the health system work better for everyone. It's a mission that requires a commitment to a culture of values, of service, responsibility, integrity, and humility. We pair that mission driven, ambition of reform with a keen sense of the opportunity and the expectation to perform better than we ever have.

As we continue to assess the state of our businesses, it is very apparent that some require a fundamental reorientation. Others require building and nurturing, and others must be reconsidered and redirected to original purpose. We also recognize the need and the opportunity to revisit and address critical processes and fundamental business practices, both internal and market facing. We're acutely aware we have an enormous responsibility for providing care for millions of people and for protecting the government and private programs we partner in. As such, we have embarked on a real cultural shift in our relationship with regulators and all external stakeholders.

Stakeholders. We intend to be proactively engaged, constructive, and responsive to the concerns of all stakeholders and in our engagement with them. We have the chance to reposition our enterprise as a far more modern, reliable, consumer, and provide and provider friendly enterprise using new technology and approaches, and we're going to pursue that course. Pursuit of these opportunities aligns to and enables our reform and change mandate and allows us to better achieve our mission and to steadily perform better in doing so. We are on this course against a challenging environment, which includes a generational pullback in Medicare funding set in motion in 2023 and playing out through 2026.

Unprecedented medical cost trends measured in both intensity of services used as well as unit prices and more aggressive care provider coding and billing technologies. The prospects refer the contraction of the Medicaid and exchange markets, the growing need to invest opportunities new technologies offer and the expectation of all health care entities to offer a better experience for consumers, customers, care providers, and employees. And finally, the continuing public controversy over long standing practices and complexities across the entire health care sector, particularly managed care, which bears the critical roles for coverage for care management and for pricing for the intensity of the costs and services used in the benefit products and programs for the entire health care market. As a leading provider of health services, we must help advance a better health system. We are committed to engaging in these pursuits with purpose and better partnership with all stakeholders, transparency in our business and reporting practices, and continued integrity in all we do.

Beyond the environmental factors that are affecting the entire sector and more specifically to us, we've made pricing and operational mistakes as well as as others. They are getting the needed attention. Our critical processes, including risk status, care management, pharmaceutical, services, and and others are being reviewed by independent experts, and they will be reviewed every year and reported on, as these processes can be reviewed at any time by outside stakeholders. While we believe in our oversight and the integrity of these processes, wherever they are determined to be at variance with prescribed practice, they'll be promptly remediated and will continue on this path. All the foregoing is fully addressable.

We can steadily restore our performance to levels consistent with our mission and stakeholder expectations, all as we strengthen an institutional culture aligned to that mission and accountable for performance. Over the last sixty days or more, we have made extensive management and operational changes aligned to this agenda of reform and performance. Other such changes to leadership, to our businesses, our culture, our approaches and practices, and to our board, governance, and succession oversight as appropriate will continue to be made as we proceed through this period. With those thoughts in mind, Tim Knoll and Patrick Conway, heads of UnitedHealthcare and Optum, respectively, will walk through some of the specifics in their businesses. John Rex will discuss financial performance and the elements affecting our outlook, and I'll come back with some closing thoughts, and then we'll have ample time for questions and answers.

Thank Steve. I'll start by emphasizing that we are approaching our business with greater humility, greater transparency, and a renewed determination to meet your expectations and our standards. The primary driver of the UnitedHealthcare earnings shortfall for 2025 is that our pricing assumptions were well short of actual medical costs. Our current view for 2025 reflects 6,500,000,000.0 more in medical costs than we anticipated in our initial outlook. A little over half or 3,600,000,000.0 of this is in our broad based Medicare portfolio.

About 1 third or $2,300,000,000 is in the commercial business, split evenly between ACA plans and our employer business. The remaining trend pressure is related to Medicaid, most notably due to elevated behavioral trend. In addition to trend driven issues, updated 2025 outlook removes about 1,000,000,000 from previously planned portfolio actions that we are no longer pursuing. It also reflects about 850,000,000 of other items, including unfavorable prior period items, primarily from 2024 and recognition of several onetime settlements. We know these are serious challenges.

We are humbled by them and will carry that sense of humility more deeply into our culture. But we also believe we can resolve our current issues and recapture our earnings growth potential. Let me now provide an update on where each business stands starting with Medicare. When we prepared our twenty twenty five Medicare Advantage offerings back in the 2024, we significantly underestimated the accelerating medical trend and did not modify benefits or plan offerings sufficiently to offset the pressures we are now experiencing. This was compounded by the magnitude of plan exits across the sector and the extent to which we now see care providers placing further service intensity into the health system.

The increasingly flexible orientation to which our Medicare networks and plan designs have evolved over recent years left us less able to address these trends in year. On trends specifically, the increase in care activity across individual and group Medicare Advantage we saw earlier this year has now affected complex populations and our Medicare Supplement business as well. Across Medicare Advantage, physician and outpatient care together represent 70% of the pressure year to date. However, inpatient utilization has accelerated through Q2 and we expect will comprise a relatively larger portion of the pressure over the full year. We continue to see utilization increases in ER and observation stays and consistently see more services being offered and bundled as part of each ER visit and clinical encounter.

In short, most encounters are intensifying in services and costing more. The higher trend is broad based geographically and across our membership, including our large retained membership base. To put this into context, we had initially assumed Medicare Advantage medical cost trend of just over 5% when configuring our 2025 bids, in line with our normalized trend experience in 2024. We now expect full year 2025 trend to be approximately 7.5%. Medicare Supplement, which typically is representative of overall care activity levels and cost trends in Medicare fee for service broadly, is up similarly in 2025 compared to historical levels.

We expect that trend to be over 11% this year versus eight to 9% in recent years, further confirming the broad based nature of the care activity and the coding and billing patterns we are seeing. On commercial, we are seeing higher than expected medical cost increases, particularly in outpatient care and, although to a lesser extent, inpatient care. Orthopedic spending and pharmacy infusions are notable factors here. In the ACA business, the revenue impact resulting from a difference between the morbidity that we price for and what we experienced is the primary cause of our underperformance. One example of the elevated commercial trend is group fully insured.

Their trend is approaching 11%, which is approximately 100 basis points higher than our initial expectations. Moving to

Medicaid. Similar elevated trends are apparent and further affected by increasing and unanticipated acceleration of cost in behavioral health, where trend is running at 20%, as well as in pharmacy and home health. We anticipate the existing rate and acuity mismatch will extend well into next year. Beyond these segment specific factors, there are other broad drivers of higher medical costs. There has been a marked increase in health care costs due in part to increases in service intensity per encounter.

For example, in Medicare Advantage, higher frequency of physician rounding, testing, and related services of specialists and in ER settings are contributing to elevated outpatient spend. In addition to strongly responsive pricing for 2026, which I will speak to in a moment, we are intensifying our remediation actions. We have stepped up our audit, clinical policy, and pay payment integrity tools to protect customers and patients from unnecessary costs. These efforts ensure care is delivered in appropriate settings and grounded in safety and quality while also identifying waste and abuse in outlier coding and billing practices. We are shifting to narrower networks and focusing on more disciplined managed products, particularly in Medicare Advantage.

And we have scaled our AI efforts across health plan operations, which improves the patient and provider service experiences while driving cost savings. Lastly, in Medicaid, we continue to actively engage with state partners using both past experience and data driven insights to show the need for immediate and more regular rate updates. Taken together, this work is helping restore our operational muscle and reclaiming executional rigor, helped by modern tools and driven by a relentless focus on improvement. Turning now to 2026. Our pricing strategy is intensely focused on margin recovery and moving back towards our earnings growth targets.

In Medicare, we have historically targeted an operating margin range of 3% to 5%. Now with the changes from the Inflation Reduction Act on the Part D program, which resulted in higher revenue but do not impact earnings, the equivalent target margin range is in the 2% to 4% range. We are working intensively to remediate Medicare through pricing, product design, and benefit changes that will enable us to be within the lower half of the targeted margin ranges in 2026 and advancing further in 2027. Our Medicare Advantage pricing strategy for 2026 assumes a trend approaching 10% compared to our current 7.5% trend expectation. This accounts for trend acceleration and incorporates factors such as changes in fee schedules and the continuation of higher yields from provider coding and billing practices.

Considering the continued cost trends and funding pressures and the need to support margin recovery, we have made significant adjustments to benefits. Additionally and unfortunately, given these pressures, we have made the difficult decision to exit plans that currently serve over 600,000 members, primarily in less managed products such as PPO offerings. We have taken similar approaches for Medicare Supplement, Group MA, and stand alone Part D pricing for next year. We will be watching the market closely as the twenty twenty six Medicare offerings become public so we can better assess our market positioning and respond quickly. For commercial, because renewals occur occur over the course of the year, we are able to price for changes more dynamically.

Our pricing will anticipate higher trend continuing into 2026 and 2027. We expect increased membership decline as well as shifts into both level funded and self funded product categories because of higher medical cost trends. In the individual exchange business, while we are prepared to continue to participate in the majority of the 30 markets we currently serve, we will approach them far more conservatively for 2026. We may need to make the difficult decision to exit select markets if we are unable to achieve the rates necessary for higher market wide morbidity. Additionally, due to the projected expiration of premium subsidies across the ACA market, our membership should decline significantly, and we are mindful of the potential for adverse selection dynamics as we right reprice these offerings for next year.

In Medicaid, there remains a lag between funding levels and member health risk, and we expect this to continue into 2026 resulting in additional margin compression in the business, including a loss within the nondual segment of Medicaid in 2026. Membership losses from early adoption of recent legislation is also factored into our initial views for 2026. Wherever states support responsible funding for Medicaid, we remain committed to serving people through that program and view this as integral to our mission. The American health system's long standing cost problem is accelerating. We are embracing our responsibility to continue to drive better health outcomes while trying to keep health care affordable for all Americans.

The operational and pricing strategies I have described reflect our understanding of the challenges we face as a company and a society and our dedication to responsibly navigating the current financial pressures so that we can set a stable course for the future. I'll now turn it over to Patrick Conway, CEO of Optum.

Thanks, Tim. Clearly, Optum's performance this year has also not met expectations, yours or ours. Echoing Tim and Steve, we are approaching this with humility and the need for deep analysis of key issues and commitment to substantially improved execution. Serving our patients and customers is at the heart of our mission and business, and we have the opportunity to truly help make the health system better for everyone. To do that, we need to refocus on our performance discipline with a bias for action and transparency for all stakeholders.

We have launched our agenda of change at Optum, starting with the evolution of our leadership team. Roger Connor brings tremendous experience in organizational execution as our chief financial officer. Krista Nelson is a deeply experienced health care operator now in the new role of chief operating officer of OptumHealth. Divya Suradhivara is already energizing reenergizing product development, marketing, and service as the new CEO of OptumInsight. And John Mart brings his unmatched pharmacy services experience to bolster the already compelling offerings of OptumRx.

These are not the only people in new roles, and there will be more. We are taking these and many other steps swiftly to enable Optum to recapture its historic momentum. Let me turn now to review of our businesses, starting with OptumHealth, where improved execution is needed most, and we are experiencing the greatest pressures to our business. Our belief remains steadfast. Value based care has the potential to transform health care.

Yet even as we struggle to align this model with new funding dynamics, it consistently delivers better outcomes. Tim highlighted the challenges of rising health care unit cost, accelerating service volumes, and provider coding intensity, which further underscores that value based care remains the most effective method for compensating providers to improve and sustain a patient's health in contrast to simply increasing the volume and price of services. Research consistently supports this premise, showing Medicare Advantage patients in fully accountable arrangements are twenty percent less likely to be hospitalized and experience eleven percent fewer ER visits compared to those in fee for service. We are early in our value based care journey. We know we have real and self inflicted executional challenges, and we bear the responsibility to get this right, recognizing that urgent work lies ahead.

We have spent a decade assembling a care delivery model today serving nearly 20,000,000 patients across three lines of business, value based care, fee for service care delivery, and services, the latter two of which help further enable value based care. The first category, value based care, has grown to account for approximately 65% of OptumHealth's revenues and serves five five million patients in fully accountable arrangements. I'll provide more details on this in a moment, but first, we'll detail the gap to our original OptumHealth outlook. Overall, OptumHealth earnings in 2025 are approximately 6,600,000,000.0 below our expectations. To break this down, approximately 3,600,000,000.0 or 55% is concentrated in our value based care business with three principal drivers of roughly equal weight.

Number one, the mix of enrollment, including more complex and dually eligible members and more new to Optum patients who were underserved. Two, accelerated medical trend, particularly physician and outpatient in Medicare and behavioral and Medicaid. And three, underestimation of new members' risk status as they came come into our care and suboptimal execution of the v '28 risk model transition. Second category, another 2,000,000,000 or 30% relates to the decision to discontinue previously planned portfolio actions. And about $1,000,000,000 or 15% is from a combination of lower service volumes in our services businesses, some nonrecurring prior period impacts and the slowing of tuck in acquisitions.

For example, on lower service volumes, in 2025, we plan for approximately 20,000,000 fee for service visits in our care delivery clinics, and we are tracking 19,000,000 visits or 5% below this expectation. Let me dive a bit deeper specifically into factors affecting our value based care business. First, b twenty eight. This industry wide shift is effectively a price reduction that we now estimate created an $11,000,000,000 headwind over three years for OptumHealth with 7,000,000,000 that'll be realized through 2025. That is 2,000,000,000 and 1,000,000,000 respectively more than our initial estimates, while we also overestimated the impact and miss executed the planned efforts to offset these v twenty eight funding cuts. Second, enrollment mix.

Consistent with q one in 2025, we have an unanticipated number of new to OptumHealth patients who were previously underserved. These new patients are largely in markets where numerous plan exits occurred. They include com complex patients who require time to be managed effectively by us. This mix impact implies negative margins near double digits for these new patients, which will improve meaningfully in 2026. Lastly, the elevated medical trend we recognized in the second quarter was exacerbated by insufficient pricing within UnitedHealthcare and other payer partners, pulling through in the form of insufficient capitation rates for Optum.

Despite these headwinds, Optum's fully accountable value based care business is delivering an operating margin of about 1% in 2025. This compares to full year operating margins of over 3% in 2024 and nearly 5% in 2023. A large part of the mis execution addressing the v twenty eight funding cuts was due to non standardized and overly localized management approach, which we are addressing with urgency. We are driving to a consistent and much more concentrated regional operating model with four market leaders. We are evaluating our position in each market.

We will shift risk back to the original underwriters until we have the hardened capacity to navigate it under value based constructs. And Optum will be much more disciplined in taking risk arrangements and product designs and constructs that allow value based care to have its intended impact. The margin compression reflects significant growth in new membership cohorts with nearly forty percent of patients served today having come in since the beginning of 2024. It also reflects the pull through from Medicare Advantage pricing dislocation Tim described and the v twenty eight payment cuts. Regarding patient cohorts, in our value based care practices, margins improve the longer patients remain.

Our most mature value based care cohorts, those from 2021 and prior, are operating at an estimated eight plus percent margin in 2025. Those in 2022 and 2023 cohorts are operating at a 2% margin. The 2024 through 2025 groups are at negative margins. Strong physician engagement, appropriate medical diagnosis, and improved consistent quality of care continues to drive year over year improvement in a cohort's financial performance and in their health. But it's taking too long, and there's too much variability in results among practices.

We are actively addressing those factors. That's the overall picture of what is happening. I'll turn now to remediation. Our plan for improvement has four key elements. First and foremost, we are improving the implementation and consistency of our clinical model, which is anchored in primary care and supported by wraparound services that continue to outperform on quality and cost.

Second, we are committed to margin recovery in value based care. We've aligned our twenty twenty six benefits and product portfolio and footprint with our payer partners to address the final year of V28 headwinds. We plan to cease arrangements for about 200,000 patients largely in fully accountable PPO products, representing approximately forty percent of the PPO patients we serve today. We expect to keep narrowing our exposure beyond 2026. We are increasing rates to reflect the higher risk profiles and acuity we are seeing and expect to continue.

We believe the combination of these activities will mitigate about half the remaining $4,000,000,000 b '28 headwind in 2026. The remainder of our offset will come from operating cost discipline and consistent execution of our care programs, which enhance engagement, diagnosis accuracy and quality outcomes, and reduce overall cost of care. With 2026 being the final year of v '28 phase in, you should expect 2026 value based care margins to remain relatively consistent with the 1% margin we are achieving this year and then begin to advance again in 2027 and beyond. We are optimizing our portfolio practices. We are managing our fee for service and fully accountable risk practices to align with performance expectations, transitioning to partial risk or service arrangements where necessary, and exiting fully accountable products in certain markets.

Third, we are aggressively advancing operational disciplines across our portfolio of businesses. The more concentrating concentrated operating model I mentioned earlier plays into more standardized approaches, predictable outcomes, and lower operating cost. We will complete the final stages of our technology integration, which will enable meaningful advances with emerging technologies like AI to drive efficiency gains. For 2026, we expect to deliver almost 1,000,000,000 in cost reductions. Finally, beyond value based care, OptumHealth also includes fee for service care delivery, including home care, ambulatory surgical care, and medical practices that are not yet fully accountable but support value based care.

These together account for 15% of OptumHealth's revenues. Most of these businesses are performing well and operate at low double digit margins. However, the primary care and multispecialty medical practices that are not yet fully accountable are running at negative margins, generating hundreds of millions of losses this year alone, placing the overall fee for service care delivery business in the mid single digit margin range. So we are actively working to improve payment yields and productivity while growing these high value services and fee for service margins. We are targeting growth for these services, which are projected to deliver strong year over year earnings growth in 2026.

The third component of OptumHealth services is comprised of businesses including managed behavioral health, military and veterans, and health financial services. These account for about 20% of OptumHealth revenues and combined have an almost 10% operating margins. Overall, at OptumHealth, while we expect continued pressure for the rest of this year, we anticipate meaningful improvement in our operations and with earnings growth in 2026, albeit with a longer path to recovery in our value based care business. We now see OptumHealth long term margins in the 6% to 8% range and about 5% for Bio Based Care specifically as we see significant growth opportunity for the decade to come. The overall blended margin will reflect the earlier investment losses generated by new cohorts.

OptumHealth is early in its development, and mix and mix execution is a clear setback, but the long term growth potential and expectations remain intact and significant. Moving to OptumInsight. There is a great need and appetite for technology and data products to help the health system perform more efficiently and effectively. Yet OptumInsight has not fully capitalized on this opportunity. That's largely due to an unfocused suite of products, lagging innovation, and longer than expected impact from last year's cyber attack, which unfortunately came at the expense of being able to drill down on business innovation, operations, and growth.

But as I mentioned earlier, we have a talented team in place now and continue to recruit talent to develop the next generation of products rooted in AI. As it relates specifically to 2025, we are adjusting our outlook downward by $1,000,000,000. About half of this is due to more gradual recovery than initially expected in some of our volume based businesses due to change health care and onetime cyber related expenses. The other half is due to pausing previously planned portfolio actions so that we can prioritize growth and innovation across our broader portfolio. At OptumRx, client retention remains high and consistent with past years.

We expect revenue growth of $18,000,000,000 or 13% and earnings growth of just over $200,000,000 or nearly 4%, driven by low margin specialty drugs. Compared to the strong revenue growth rate, our earnings growth has been constrained by four main factors. The removal of portfolio actions from our plan is roughly a $150,000,000 headwind, another $50,000,000 from a couple of ancillary businesses where we are taking aggressive corrective actions and adjusting plans. And the impact of initial launch phase of our private label business, Nuvela, is a roughly $150,000,000 headwind. As it matures, we see Nuvela delivering affordability for our clients and consumers and strong earnings for OptumRx.

Additionally, GLP-1s, which can benefit appropriate patients, continue to impact earnings, representing a $160,000,000 headwind for our pharmacy services businesses. After three months in this role, I wanna thank the thousands of people serving in Optum and to let external stakeholders know that the problems are fixable and that Optum will continue to drive long term growth and make the most of our opportunity to serve people. I'll turn it over to our President and Chief Financial Officer, John Rex.

Thanks, Patrick. I'll first walk through second quarter results, then provide some color around the underlying assumptions within our reestablished '25 outlook. Starting with the second quarter, UnitedHealth Group reported revenues of nearly $112,000,000,000 a 13% increase over the prior year, which reflected growth across UnitedHealthcare and Optum. Adjusted earnings per share of $4.08 was below the same period last year. This was due primarily to the pricing and medical cost trend factors at UnitedHealthcare and OptumHealth.

Included is about 1,200,000,000.0 in discrete items. A little over half reflects the recognition of unfavorable impacts to our ACA exchange offerings, which I will describe later in more detail. The remainder is the settlement of several outstanding items which have been in dispute or for which collection has recently become questionable. Most of these items arise from prior years. The full year '25 outlook we've offered today accommodates 1,000,000,000 in additional potential such items that we may seek to resolve in year.

Now on to business overviews. At UnitedHealthcare, second quarter revenues grew by over $12,000,000,000 to $86,100,000,000 while operating earnings declined by $1,900,000,000 to $2,100,000,000 primarily due to the medical trend factors Tim discussed. Within our Medicare businesses, year to date Medicare Advantage growth is 650,000 people, including those who are duly eligible for Medicaid and Medicare. As noted, the second quarter results reflect just over $600,000,000 of unfavorable impacts from our ACA exchange business, which includes acceleration of anticipated second half losses with the establishment of a premium deficiency reserve. This is due to the higher patient morbidity that is pervasive across the entire exchange market.

Given competitive market dynamics, we have less member growth within our commercial offerings than initially anticipated. ACA exchange drives about one third of our reduced commercial risk member growth outlook for '25, with group insured comprising much of the rest. As outlined earlier, our Medicaid offerings continue to experience pressure from the lag in state rate updates relative to the health status of the members being served. Our state partners remain highly engaged in ongoing rate conversations, and we are closely attuned to the federal funding changes and the continued pace of medical cost trends, particularly in behavioral health. Moving to Optum.

OptumHealth revenues were 25,200,000,000.0 in the second quarter, a decline of 1,800,000,000.0 from last year. This was driven by the previously noted contract adjustments and the effects of the Medicare funding reductions. OptumHealth now expects to add 300,000 new value based care patients this year compared to the initial 650,000 outlook as it seeks to focus on improving operating performance. As noted, we've updated our long term target margin objective for OptumHealth to the 6% to 8% range. OptumInsight had revenues of 4,800,000,000.0, an increase of 285,000,000 or 6% year over year.

We continue to progress on customer recovery following last year's cyber event, albeit pacing more slowly than expected, and this is a component of the reduced full year outlook. The contract revenue backlog at the end of the second quarter was $32,100,000,000 OptumRx second quarter revenues grew $6,000,000,000 or 19% over last year to 38,500,000,000.0 driven by new customer adds as well as continued contribution from specialty products. Total adjusted scripts were $414,000,000 compared to $399,000,000 in the year ago quarter. Moving on to 2025 guidance. Our adjusted earnings outlook is at least $16 per share.

Revenues will approach $448,000,000,000 growth of 11% over '24. We now expect a full year medical care ratio of 89.25% plus or minus 25 basis points. This compares to the initial 86.5% midpoint we offered at the end of last year, with the increase driven by the factors discussed. Within this, seasonal pacing compared to historical measures is impacted somewhat by the Part D coverage gap modifications due to the Inflation Reduction Act. With first half results at the midpoint, that places the second half at just under 91.5% with the fourth quarter expected to be the highest and at this distance, a relatively proportionate distribution on either side.

The full year outlook contemplates a total of 1,600,000,000 of potential settlement items, an incremental $1,000,000,000 over the $600,000,000 recognized in the second quarter. Our tax rate for the year is now estimated at about 18.5%, affected by our revised earnings outlook as expected benefits remain steady while earnings declined. The lower tax expense in the second quarter reflects the year to date recognition of the updated full year effective tax rate. We expect the second half rate to be just over 20%. Full year '25 cash flows from operations are expected to be about 16,000,000,000 or 1.1 times net income.

In June, we increased our dividend by 5%, and we will strike a balance as to how we use capital over the near term, being thoughtful about maintaining a strong balance sheet and credit rating and mindful of long standing commitments, including the pending Amedisys transaction. Our updated share count of 912 to 914,000,000 compares to the original outlook of 918 to $923,000,000 and considers only share repurchase completed earlier this year. We will continue to balance and assess our capital priorities as we progress to returning to the performance levels we know we can achieve. With that, I will hand it back over to Steve before we head into Q and A.

John. This is a challenging year for our enterprise, but I feel strongly we can overcome these challenges as we've done before. I can see the depth of the commitment of our team. We are regaining the intensity, the precision, and the executional disciplines required to perform consistently and reliably. Our customers and our shareholders deserve it, and the health system expects us to function at our full potential.

As we look towards 2026 and beyond, we expect the efforts we discussed throughout today's call to steadily improve our performance. It begins with respecting pricing basics, advancing our foresight acumen, and just better, more intense, more decisive overall management. We will be driving better business practices, better consumer and provider experience, and accelerating investments in areas in key areas to both strengthen our foundations and modernize our businesses anchored in practical innovations and scaled app AI applications. We are continuing to evaluate the investments we need to make in the near term to meet our long term growth potential while acknowledging the challenging environment in the year ahead. As I mentioned at our shareholder meeting in June, we're rebuilding the trust through both change and through increased transparency.

That includes work to ensure a wide range of stakeholders have confidence in the integrity of our company and our business practices. This work is moving forward in our assessment of key policies, practices and associated processes by the end of the third quarter and our first performance measures report in the fourth quarter. We have retained independent experts to oversee and assist in these reviews, including the analysis group and FTI consulting. We will use this to continually strengthen and advance our strong compliance environment. Looking to 2026 at this distance, I would expect solid but moderate earnings growth.

As we look further ahead, we see our earnings growth outlook strengthening quickly in 2027 and pacing steadily upward over the succeeding years. Now let's open it up for questions. Operator, please.

The floor is now open for questions. At this time, if you have a question or a comment, please press star one on your touch tone phone. You may remove yourself from the queue by pressing star two on your touch tone phone. We ask you to limit yourself to one question. If you ask multiple questions, we will only be answering the first question so that we can respond to everyone in the queue this morning. First question comes from AJ Rice with UBS. Hi,

everybody. Maybe just to drill down a little bit on OptumHealth, if I could. You're talking about some rate increases or how you're pricing for a much higher trend in MA on the insurance side. I would assume that has some trickle down benefit to OptumHealth. Or when you're talking about having margin consistent with this year, next year on the physician piece, is that does that not contemplate some benefit from that repricing?

And maybe as well talk about your discussions with the outside plans that OptumHealth contracts? I mean, are you seeing them make same similar steps, toward pricing for a more reasonable margin next year that you're trying to do at UHC?

It certainly does, AJ. Patrick, you wanna comment?

Yeah. Thanks, AJ, for the question. Let me take the sort of pieces in part. So, yes, in terms of the pricing from across payers, UnitedHealthcare and other payers, as they adjust pricing, that flows into our capitation rates. That is a tailwind, where it versus the headwind we saw, this year.

We're also working with our payer partners on benefit reductions, which we talked about. So significant benefit reductions, across payer partners and a much, tighter, transparent, bidirectional dialogue, in this year, which I think sets us up, better for next year. Those combinations, we think, mitigates, 50% of the headwind, of v '28, which as you heard, we sized at $4,000,000,000 for next year. The other two components that will, mitigate the other 50%, one, operating cost reductions where we, continue to hone our model, using AI and other tools generating operating, cost reductions. And then next, you know, deep engagement, with the patient cohorts we we see.

So as you heard, as we mature and remain stable in those cohorts, you have increased performance over time. So as you pace into 2026, as you heard, we believe we can maintain those margins at the 1% level. Obviously, we'll continue to do the work each day to see if there's any upside to that potential. But, the approach this year with our payers has been tight, close, and I think will bear, benefits going into 2026.

Our next question comes from Justin Lake with Wolfe Research.

Thanks. Good morning. Appreciate all the detail. I wanted to focus on the run rate out of '25 into 2026. So it looks like you're about $5 of earnings for the second half.

Pay it back about a dollar for the discrete items that John mentioned. You're about $6. Given typical seasonality, maybe that's like $13 of run rate earnings. So wanted to see if that's reasonable math first. And then what are the moving parts that drive EPS growth specifically?

Maybe you could talk to where your MA margins are this year versus where you expect them to be next year. Thanks.

Hey, Justin. Good morning. It's it's John Rex. Just a few comments on that. So, yes, your overall kind of assessment of second half is is is correct.

A few things I'd point to, and then I think I'd ask Tim and Bobby to comment a little bit also on just we talk about, Medicare Advantage margins and where that goes. I mean, the the the key elements here so, yes, we are kind of looking at getting some things behind us in terms of the actions we're taking we anticipate taking in the second half. And as you know really quite well, 80% of our premium revenues reprice on January 1. So very significant impact in terms of that as you move into that next year, in terms of the the, the impact that creates in terms of off the run rate that you see going into the into the second half. And I've asked Bobby to maybe comment a little bit specifically on your piece on Medicare Advantage.

Yeah. Yeah. Thanks, Justin, for the question. Thanks, John. So, Justin, when you think about, you know, 2020, '6 or 2025, where we're likely to kind of pencil out for the balance of the here is more in the low end of the new normal range that Tim outlined in his prepared remarks.

So think kind of the two to two and a half percent range, and I'm talking about kinda all broad based UHC Medicare in that bucket. And then given the actions that we're taking for 2026, so, the meaningful benefit cuts, the plan reductions, the trend that we're pricing towards, we do believe that'll allow us to overcome some of the headwinds, again, tied to, you know, v 20 funding cuts and that embedded trend and expand those margins to a range of two and a half to 3%. So think about us then getting to kind of the midpoint of that range by 2027 and advancing from there. Thanks for the question.

So, Justin, yeah, really kind of the math that you're looking at here. So continued trend accelerations that we look at through the end of the year while our revenues are staying the same, and then we get to Jan one where the vast majority of premium revenues reset, and that's really the impact that you're seeing in terms of as you look at that 2H run rate and where we come out. Thank you.

Our next question comes from Josh Raskin with Nephron Research.

Thanks. Good morning. I appreciate some of the commentary you've made on '26 and '27 even. Do you have an updated view on your long term EPS growth rate that, you know, was formerly cited at 13% to 16% at the enterprise level? And then I heard the target margin's obviously updated for OptumHealth.

But do you have updated target margins for maybe UHC in its entirety as well as the other two segments within Optum?

Yeah. Thanks, Josh, for the question. You know, as you can appreciate, as we're just coming back, onstream, in the near term, our growth rates do not reflect, I think, the potential of this enterprise. So from it's somewhat academic, but I expect we will pace back steadily to low double digit ranges and continue to advance from there. And I think importantly, the framework for our long term growth outlook remains very much intact.

Reasonable year over year organic growth from within well run businesses, the compounding effect of deliberate productivity gains, the compounding effect of capital applied in the form of share buybacks as we return value and capital to shareholders, and the compounding effect of capital used in evolving the business model toward a more expansive view of the health care markets that is less fragmented, more integrated to better serve consumers and the overall system. And the components of that should allow us to continue to grow at the strong levels we've experienced in the past. And that's our outlook on it.

And, Josh, just maybe a little bit on margin. Maybe Tim has a comment, and he he made some comments on on on Medicare in particular with the IRA changes. And, Tim, maybe if you just, could reflect on those.

Good morning, Josh. Thank you. So, you know, we talked about, the reframing of the broad based Medicare Advantage, targeted margin range. Really kind of really not all that different, just the mechanical implications of more revenue coming through the IRA without, necessarily any incremental earnings. And then as Bobby just talked about, you know, we see that pacing to the closer to the midpoint in 2026 and getting there in 2027.

On the commercial business, 2026, will be a year where, we'll not get all the way into our target margin range of seven to 9%, but certainly see a path to get there thereafter. So really no change bottom line to the targeted margin range, across UHC. John, any more?

I think just maybe Tim's comment that he made on the call in terms of how he thinks about Medicare Advantage with the addition of those IRA dollars and and such. And, doesn't change really the productivity of the the business. It's just that that piece of the revenue impacts the margin calculation, that came in piece of revenue that came in without really any earnings attached to it to when it came in. So similar profile.

UnitedHealth Group (UNH) Q2 2025 Earnings Call Transcript

Company Participants