United Health Jumps After Big Q3 Earnings

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UnitedHealth Group (NYSE: UNH) beat earnings expectations this morning, posting adjusted EPS of $2.92 against a consensus of $2.82. The stock opened near $379, buoyed by the EPS beat and a raised full-year guidance. But there's a wrinkle worth noting: revenue came in light at $113.2B versus $114.19B expected. That miss, paired with operating income that collapsed year-over-year is a blemish investors so far have not focused on. Shares are up 4.17% pre-market.

The Beat Masks Underlying Strain

UnitedHealth delivered on the bottom line, and that matters. A $2.92 adjusted EPS beat by $0.10 is solid execution. Yet operating income dropped sharply to $4.3B from $8.7B a year ago. That's a 50% decline. The company navigated this by managing the tax rate and share count, which allowed adjusted earnings to outpace operating performance. It's a reminder that EPS beats don't always reflect operational strength.

UnitedHealthcare Powers Forward, Optum Stumbles

The divergence between segments tells the real story. UnitedHealthcare, the insurance unit, surged 16% year-over-year to $87.1B in revenue. That's where the growth lives. Optum, the sprawling health services and technology division, grew just 8% to $69.2B. I'd keep an eye on Optum. At 8% growth, it's decelerating, and that's the division that's supposed to drive margin expansion and diversification away from pure insurance risk.

Medical Costs and Medicare Headwinds

Management flagged elevated medical cost trends and Medicare funding reductions as ongoing challenges. These aren't new problems, but they're persistent. The revenue miss suggests pricing power remains constrained, even as the company manages volume. Operating cash flow of $5.9B is respectable, but it doesn't offset the operating income decline. This is a business managing headwinds, not outrunning them.

Key Figures

Adjusted EPS: $2.92 (vs. $2.82 expected); beat by $0.10 Revenue: $113.2B (vs. $114.19B expected); miss of $990M Operating Income: $4.3B; down 50% year-over-year Operating Cash Flow: $5.9B UnitedHealthcare Revenue: $87.1B; up 16% YoY Optum Revenue: $69.2B; up 8% YoY

The revenue miss is the number I'd focus on. It suggests the company is working harder to maintain margins rather than growing into them.

Guidance Raised, But Caution Lingers

UnitedHealth raised full-year 2025 guidance to at least $16.25 per share in adjusted earnings and $14.90 in net earnings. That's a positive signal, and it reflects confidence in the back half. CEO Stephen Hemsley struck a measured tone, stating the company remains "focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond." Translation: This year is solid execution; next year is where the real acceleration should show up. That's cautious optimism, not bold expansion.

Story Continues

What Matters Next

Watch how management frames medical cost trends on the earnings call this morning (call currently underway as of 9:15 AM ET). If they signal stabilization or better pricing power ahead, the stock has room to run. If they're still defensive on margin outlook, today's rally could face headwinds. The Buffett vote of confidence (Berkshire initiated a new position) has already lifted sentiment.

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