On Tuesday, UnitedHealth (UNH) surged over 9% at the open, accumulating a 30% gain month-to-date, trading at $352.83 per share. The positive move followed the company’s announcement that its first-quarter profits significantly surpassed Wall Street expectations, leading to an upward revision of its full-year outlook. The earnings report showed that UnitedHealth posted revenues of $111.72 billion in the first quarter, a 2.0% year-over-year increase, beating estimates by $2.06 billion. Adjusted earnings per share (EPS) came in at $7.23, exceeding the highest analyst forecast. A key metric measuring medical costs performed better than expected, prompting the company to raise its full-year EPS target by 50 cents.
Chief Financial Officer John Rex stated that all of the company’s major business segments performed above management’s expectations, and the company has begun to see returns from its artificial intelligence investments. He noted that UnitedHealth is on track to invest $1.5 billion in AI this year, with an expected average return on those investments of at least 2:1, and positive returns anticipated within 12 months. Additionally, the company plans to repurchase at least $2 billion in stock by the end of the second quarter under its existing buyback authorization.
UnitedHealth appears to have fully moved past the disappointing results of 2025. As the largest private health insurer in the United States, the company saw profits decline last year, missing its earnings target for the first time since 2008, and its stock fell 34% in 2025. The only positive news at that time was that Berkshire Hathaway, led by Warren Buffett, purchased over 5 million shares of the company, bringing it back into the market’s spotlight. Following Tuesday’s earnings release, the stock rose more than 9% and remained elevated through the afternoon session.
The majority of the company’s revenue comes from its Medicare and Medicaid supplemental plans (including Medicare Advantage), as well as health insurance plans for individuals and businesses. Management noted last year that the problems stemmed from miscalculations in projected costs for physician and hospital services when setting customer premiums for 2025. The company subsequently took a series of measures, including raising premiums for 2026, re-evaluating target markets, and modernizing internal systems, such as introducing cybersecurity and artificial intelligence technologies. CEO Stephen Hemsley stated that the company has fully refocused on the U.S. healthcare sector and exited its overseas operations, while also making leadership changes. Management raised its full-year EPS guidance from $17.10 to $17.35, and its adjusted EPS guidance from $17.75 to $18.25.
Among the five largest companies by Medicaid market share, UnitedHealth leads by a wide margin with a market capitalization of approximately $315 billion. The company generated $16 billion in free cash flow last year, exceeding the combined free cash flow of its four competitors. Jefferies analysts maintained a “Buy” rating this week and raised their price target from $340 to $373. As the company continues to optimize its operating scale and stands to benefit from a better-than-expected Medicare Advantage payment plan for 2027 approved by the U.S. government, UnitedHealth is getting back on track.
