Key Points
UnitedHealth Group beat analysts' expectations for revenue and earnings.
The company increased its full-year profit outlook for 2026.
Shares jumped more than 9% as the market opened.
UnitedHealth Group(NYSE: UNH) appears to have put its disappointing 2025 firmly in the rearview mirror. The company posted first-quarter earnings on Tuesday that not only beat analysts' estimates but also prompted it to raise its 2026 profit guidance.
It's a welcome development for the nation's biggest private insurer, which struggled last year with dwindling profits and its first earnings miss since 2008. UnitedHealth Group stock fell 34% in 2025, and about the only good thing that happened to the company was that Berkshire Hathaway, helmed by now-retired CEO Warren Buffett, put it on the map by buying more than 5 million shares of the beaten-down stock.
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UnitedHealth Group stock jumped by more than 9% after the company posted earnings on Tuesday, and the stock was still trading at elevated levels at midday. But I don't think it's too late for investors to buy in.
Image source: Getty Images.
A look at UnitedHealth Group's earnings
The company's first-quarter report showed UnitedHealth Group posting $111.72 billion in revenue, up 2% from a year ago and better than the $109.57 consensus estimate by analysts. Adjusted earnings per share were $7.23, versus expectations of $6.57 per share.
The company gets a large portion of its revenue from Medicare and Medicaid supplemental plans -- including Medicare Advantage -- as well as health insurance plans for individuals and businesses.
Management noted last year that its problems stemmed from a miscalculation of the charges it would incur for services from physicians and hospitals when it set its 2025 customer premiums. It underwent a series of measures to fix the problem, but those efforts take time -- increasing 2026 premiums, reexamining which markets it wanted to serve, and modernizing internal systems to include cybersecurity and artificial intelligence.
"We have refocused the organization squarely on U.S. healthcare, exiting non-U.S. businesses," CEO Stephen Hemsley said. "We have refreshed nearly half of our top 100 leadership roles. Our accelerated technology and AI investments are showing meaningful potential. And we are actively evolving business practices in areas such as data and processing interoperability and speed, pharmacy practices, prior authorization, product and reporting transparency, and management practices more broadly."
Management increased full-year earnings guidance from $17.10 per share to $17.35 per share, and adjusted earnings guidance from $17.75 per share to $18.25 per share.
UnitedHealth Group and the road ahead
A hallmark of a Warren Buffett stock is finding a great company, with an indispensable business, that's fallen to an appealing price. UnitedHealth Group fits that description to the letter.
Of the five companies with the greatest market share of the Medicaid market -- UnitedHealth Group, Centene, CVS Health, Elevance Health, and Molina Healthcare -- UnitedHealth Group is by far the largest, with a market cap at this writing of $315 billion.
UNH Market Cap data by YCharts
That gives it more resources than the competition -- the company's free cash flow of $16 billion over the last year was more than the combined free cash flow of its four competitors.
UnitedHealth Group appears to be returning to its winning ways. Analysts at Jefferies maintained their "buy" rating for the stock this week, raising the price target from $340 to $373. And 22 of 28 analysts surveyed by Yahoo! Finance have buy ratings, with only one suggesting that investors should sell.
For long-term investors, UnitedHealth Group is a strong buy for me because I see the company continuing to right-size its operations. It will be well-positioned to capitalize on better-than-expected Medicare Advantage payments authorized by the U.S. government for 2027.
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Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends CVS Health and UnitedHealth Group. The Motley Fool has a disclosure policy.
