UnitedHealth Group had a rough 18 months. Regulatory pressure, rising healthcare costs, and margin compression sent the stock down hard from its 2024 highs. But Q1 2026 is starting to look like a turning point.
UnitedHealth Group Incorporated, UNH
The company reported first-quarter earnings of $7.23 per share, beating expectations. Management followed that up by raising its full-year adjusted earnings outlook to more than $18.25 per share.
The stock responded. UNH gained more than 3.5% on Tuesday, trading around $368, even as the S&P 500 fell 0.64% and the Nasdaq dropped 1.22%.
One of the clearest tailwinds came from Washington. The Centers for Medicare & Medicaid Services finalized a 2.48% Medicare Advantage rate increase for 2027. That’s a big jump from the 0.09% increase proposed back in January.
The CMS now projects around $13 billion in additional payments to Medicare Advantage plans in 2027, compared to just $700 million projected earlier. For UnitedHealth, that means more room to price MA policies in line with actual healthcare costs.
UnitedHealth is putting $1.5 billion into AI investments in 2026. The first major product out of that effort is Optum Real, which automates parts of the managed care process including claim evaluation and coverage validation.
Management says Optum Real can cut manual contact costs by up to 76%. That’s a real number, and it matters for a business operating at scale.
Optum Rx also reported a 25% drop in call center volume after rolling out automated customer support. These aren’t small wins.
There’s a short-term cost to all this. The operating cost ratio climbed to 13.8% in Q1, up from 12.4% a year ago. That’s the price of building the infrastructure. The payoff is expected to come in future margins.
UnitedHealth sold Optum UK in early March 2026 and is in the process of exiting its remaining South American businesses. Management confirmed on the Q1 call that the company is pulling back to its core U.S. healthcare operations.
International segments ran at lower margins and faced more regulatory friction. Getting out frees up capital and removes drag on overall profitability.
The company also announced the resumption of its share repurchase program in Q2, an early sign that freed-up capital will flow back to investors.
UNH now trades at roughly 19x forward earnings. The average price target from 23 Wall Street analysts sits at $384.59, implying about 4.86% upside from current levels.
The stock is still down 12.24% over the past 12 months, and the RSI hit 82.37 on Tuesday, suggesting some near-term heat in the move. Key resistance sits at $376, with support at $351.
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