UnitedHealth earnings collapse on $1.6bn in one-time charges
Insurer forecasts 2026 profit growth despite revenue decline as it right-sizes portfolio
UnitedHealth Group reported a collapse in fourth-quarter earnings to one cent per share, dragged down by $1.6bn in one-time charges tied to the Change Healthcare cyberattack, restructuring efforts, and business divestitures.
The largest US health insurer by revenue recorded GAAP earnings per share of $0.01 for the quarter ending December 31, 2025, a dramatic decline from the same period a year earlier. Adjusted EPS, which strips out special items, came in at $2.11, meeting analyst expectations that had ranged between $2.09 and $2.12.
The massive $1.78 per share charge—excluded from adjusted results—consisted of $799m in final costs related to the February 2024 Change Healthcare cyberattack, a $2.5bn restructuring charge, and $442m in net portfolio divestitures. The cumulative impact to net earnings reached $1.62bn for the quarter.
Despite the fourth-quarter shortfall, UnitedHealth issued 2026 guidance targeting adjusted earnings of more than $17.75 per share, representing growth from the $16.35 expected for full-year 2025. The company forecasts revenue exceeding $439bn for 2026, a 2% decline from the prior year that reflects "planned right-sizing across the enterprise" as it exits underperforming Medicare and Optum Health segments.
"We are positioning the company for sustainable double-digit growth beginning in 2027," company executives stated on the earnings call, emphasizing operational rigor and more prudent pricing strategies. The insurer expects its medical care ratio—the percentage of premium revenue spent on medical care—to improve by 30 basis points to 88.8% in 2026.
The turnaround strategy comes after what executives described as a turbulent 2025. The Change Healthcare cyberattack, which disrupted claims processing for healthcare providers across the US, has exacted a heavy financial toll. Total cyberattack-related costs for 2024 and 2025 are now estimated to exceed $2.3bn, making it one of the most expensive corporate hacking incidents on record.
Shares of UnitedHealth were down 1.3% in morning trading on Tuesday at $351.64, extending a volatile period for the stock. The healthcare giant has faced pressure throughout 2025 from elevated medical utilization trends and uncertainty around Medicare Advantage reimbursement rates. Earlier in January, the company's shares dropped 9% in after-hours trading following a smaller-than-expected Medicare payment increase proposal from federal regulators.
Analysts remain broadly bullish on the company's long-term prospects. Bernstein analyst Lance Wilkes maintained an "Outperform" rating with a $444 price target, designating UnitedHealth as a "top healthcare pick for 2026" based on anticipated margin-lifting initiatives. Of the 27 analysts covering the stock, 19 rate it a buy while six recommend hold.
The company faces significant headwinds in the near term. Medicare funding pressures are projected to create more than $6bn in impact across the enterprise during 2026, while Medicaid profitability is expected to continue declining. The company also anticipates membership reductions as it exits less profitable business lines.
"The 2026 guidance reflects near-term margin disruption from portfolio rationalization, ACA retrenchment, and planned exits," according to analysis of the earnings call transcript. "However, the company is targeting margin improvements across all of Optum Health segments."
Optum, the company's healthcare services division that accounts for roughly half of revenue, has faced particular pressure. The segment is expected to experience a 4% revenue decline for full-year 2025 as the company right-sizes its portfolio.
Despite the challenges, UnitedHealth's scale and diversification continue to attract investors. The company maintains a market capitalization of $322.7bn and generates more than $435bn in annual revenue. Its P/E ratio of 18.56 remains below the five-year average, suggesting the stock may be undervalued relative to its historical trading range.
As the company works through its restructuring and closes the book on cyberattack-related costs, investors will be watching closely for signs that the operational improvements management has promised will materialize in 2026. The success of those initiatives will be critical for UnitedHealth to regain momentum and achieve its target of double-digit growth in 2027.