UnitedHealth (UNH) Earnings Tuesday: Medicare Advantage, Utilization, Margins

• UnitedHealth Group (UNH) is set to report their Q3 FY2025 earnings on Tuesday, October 28, before market open.

• UNH has been subject to an incredibly turbulent year, touching highs of $631 just last November, before sinking as low as $235 following a CEO assassination and DoJ probe.

• This call, and the results of the pending Department of Justice investigation, will be monumental in determining UNH’s performance into 2026 and beyond. 

UnitedHealth has had one of the strangest years in the history of the stock market. From a CEO assassination, to a probe from the Department of Justice, all the way back to an investment from Warren Buffett, they have experienced just about all of the highs and lows that a company possibly can. 

In a fundamental context, it has been an undeniably bad year for UNH. They missed analyst consensus estimates for both earnings per share (EPS) and revenue in both of their Q1 and Q2 FY2025 reports. These misses, in addition to the major bearish factors mentioned above, have contributed to a jarring 38% decrease in share price so far in 2025. 

Despite all of this bearish news and a very poor performance year-to-date, there are a number of bright spots for the company as well. While shares are down 38% so far this year, they are actually already up 35% from UNH’s low of the year of $235 per share. Looking ahead to their upcoming earnings report and the future beyond it, it starts to become clear why Warren Buffett felt buying 5 million shares ($1.53 billion) of UNH near the low of the year was a good idea. 

Ahead of their Q3 earnings report, analyst consensus estimates for UNH call for an EPS of $2.82 and revenue of $113 billion. These numbers imply a modest $2 billion increase in revenue from last quarter, but continue a trend of constantly declining EPS numbers, from $7.20 in Q1, to $4.08 in Q2, and now to $2.82 in Q3.

Aside from the company’s core numbers and forward guidance, there are no shortage of other factors that could move shares this call. One such factor is the nation’s broader policy backdrop headed into 2026; the Center for Medicare and Medicaid Services (CMS) recently made their final announcement for Medicare Advantage rates in 2026, which implies a 5.06% payment increase to plans, which is a key input for 2026 bid economics. Any commentary on how that payment increase may impact UNH will be important. 

Any updates on Optum will also be a major player in how shares react to this earnings call. The company’s Q2 report issued full-year guidance for Optum Rx revenue of $151 billion and stated that the company had an additional $32 billion in backlog. Whether the company is still on track for that $151 billion in revenue, and any insight on how they are converting on that backlog, could impact share price. 

Additionally, while they are unlikely to come this call, any details on the progress of the Department of Justice’s investigation into UNH’s Medicare billing practices would be huge. The DoJ alleges that UNH contributed to fraudulently diagnosing patients to increase their payments. If UNH can beat that case, shares will fly, and if they can not, shares could plummet. Should the company provide any details about the investigation or its progress during this call, investors would react quickly to price in that information. 

After their Q3 call is complete, barring a 1,000%+ beat of EPS and revenue or some other parabolic catalyst, UNH will still be far from out of the woods. Shares will still be far from their all time high of $631, and investors will still lack confidence with a pending DoJ investigation. For this reason, there are a number of factors UNH investors should be aware of headed into 2026. 

The most major of these factors, outside of the aforementioned investigation, is whether or not the company can return to earnings growth next year. In their Q2 report, UNH indicated that they expect to return to earnings growth next year; investors are curious how Medicare Advantage repricing, utilization normalization, and Optum execution support that path. 

Cash generation and capital returns will also massively contribute to UNH’s share price into 2026 and beyond. John Rex, the company’s CFO, set a baseline of $16 billion in dividend payments for 2025, and alluded to the possibility of an increase in 2026. Any changes to these expectations could move the stock. 

UNH’s 2025 can be easily defined with one word: turbulent. That turbulence does not seem to be going anywhere anytime soon. There is a very real possibility that the DoJ finds nothing, investors buy in on the new CEO, and this stock is back at $600 within six months. However, there is an equally real possibility that the DoJ finds a great deal of wrongdoing and penalizes the company heavily, creating further doldrums into the new year and beyond. 

While no one can be sure of the direction, one thing’s for sure; UNH will not be trading at the same price six months from now.

Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus

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