UnitedHealth Group's (UNH) fourth-quarter results showed a 3.2% decline in revenue year-over-year, attributed to heightened regulatory scrutiny and increased costs in its insurance and pharmacy benefit management divisions. The company also revised its full-year 2026 guidance downward.
- Q4 revenue: $94.1 billion, down 3.2% YoY
- PBM segment revenue declined by $1.8 billion
- Operating margin: 12.7%, down from 14.3% in Q4 2024
- Litigation reserves: $680 million, up 45% YoY
- Adjusted EPS: $7.12 vs. $7.25 consensus
- Medical loss ratio: 83.4%, up from 81.1% in prior year
UnitedHealth Group (UNH) posted a 3.2% year-over-year decline in fourth-quarter revenue, totaling $94.1 billion, marking the first quarterly revenue contraction in over two years. The drop was primarily driven by a $1.8 billion reduction in pharmacy benefit management (PBM) segment revenues, linked to changes in prescription drug pricing regulations and increased rebate liabilities. The company's operating margin fell to 12.7%, down from 14.3% in the same quarter last year, as rising compliance costs and legal expenses related to federal and state investigations weighed on profitability. Specifically, UNH recorded $680 million in litigation reserves during Q4, a 45% increase from the prior-year period. Adjusted earnings per share came in at $7.12, slightly below the consensus estimate of $7.25, reflecting higher-than-expected medical cost inflation across its Medicare Advantage and commercial health plans. The medical loss ratio rose to 83.4%, up from 81.1% in Q4 2024, signaling increasing pressure on underwriting margins. The stock reacted negatively, falling 4.1% in after-hours trading, with analysts citing concerns over the sustainability of margin compression. Investors are now closely monitoring UNH’s upcoming earnings call for further insight into its strategy to mitigate regulatory risks and reposition its PBM operations.