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UNH Slides As Markets Open, But Wall Street Bullish
UNH shares are opening down 5.7% following the Q2 earnings miss and cautious margin outlook.
However Wall Street maintains its bullish position on United Health Group.
Bernstein maintained its Outperform rating and $377 price target on UnitedHealth, citing strong market positioning and a long-term earnings recovery tied to strategy and operating model changes. While Q2 results matter, the firm stresses that investor confidence and clarity on 2025/26 planning are more important than near-term metrics.
Key catalyst themes:
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Reducing uncertainty
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Medicare Advantage pricing recovery
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Platform reset at Optum and UHC
2026 EPS growth guidance of ±15% would suggest a return to the 13–16% normalized EPS range.
Optum Health Contracts and Margin Reset
The Optum unit also experienced margin pressure:
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Optum Health revenue fell 7% YoY to $25.2B
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Operating margin dropped from 7.1% → 2.5%
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Management cited Medicare funding cuts, underpriced contracts, and misaligned risk model assumptions.
UnitedHealthcare Hit Hard
Operating earnings at UnitedHealthcare fell to $2.1B, down nearly 50% YoY, as the medical cost ratio surged and Medicare Advantage pricing failed to offset rising utilization:
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Operating margin dropped from 5.4% → 2.4%
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Medical trend now tracking ~7.5% vs. pricing of just 5%
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2026 pricing is expected to reflect nearly 10% trend growth
UnitedHealth Group (NYSE: UNH) posted mixed second-quarter results, as topline revenue of $111.6B beat expectations, but adjusted EPS of $4.08 sharply missed analyst estimates of $5.99. The company’s performance was dragged down by a $1.2B charge tied to its individual exchange business and other discrete items. Despite the earnings miss, UNH reinstated full-year guidance and struck a constructive tone on its long-term recovery path.
So far in pre-market trading, the stock is down 2.18% as of 8:30 AM EDT.
| Metric | Estimate | Actual | Result |
|---|---|---|---|
| Revenue | $111.59B | $111.62B |  Beat |
| Adj. EPS | $5.99 | $4.08 |  Miss |
| Net Margin | – | 3.1% | Miss YoY (4.3%) |
| Medical Cost Ratio | – | 89.4% | Unfavorable YoY (+430 bps) |
Guidance Update: UNH Reinstates Full-Year Outlook
After suspending its 2025 forecast in May due to volatility in medical trends, UNH has reinstated its full-year guidance:
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FY25 Adjusted EPS: At least $16.00
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FY25 Revenue: $445.5B–$448.0B
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Medical Cost Ratio: 89.25% ± 25 bps
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Operating Margin: 4.8%–5.0%
This implies a more stable second half, even though pricing still lags the cost trend in key segments.
We’ve embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society… guided by a culture of service and longstanding values
CEO Stephen Hemsley emphasized a shift toward cost discipline and long-term structural improvements:
The post Live: United Health Group (UNH) Drops After Q2 Earnings appeared first on 24/7 Wall St..
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Author: Joel South
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