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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-05 · 78 added, 57 removed, 261 unchanged (34% of the section changed)

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In the fourth quarter of 2025, the Company took various actions as a result of a strategic review of its assets and businesses aimed at advancing and scaling its core operations, including the value-based care business at Optum Health.

In the first quarter of 2026, these actions resulted in a net gain of $230 million reflecting gains on the sales of businesses previously held for sale as of December 31, 2025, partially offset by incremental losses on other businesses held for sale.

By segment, this included gains of $528 million and $8 million at Optum Insight and Optum Rx, respectively, partially offset by a net loss of $306 million at Optum Health.

For the three and six months ended June 30, 2026, these actions resulted in a net loss of $39 million and a net gain of $191 million, respectively.

For the three and six months ended June 30, 2026, net portfolio divestitures included incremental losses on businesses held for sale, while the year-to-date results also included a net gain on the sales of businesses previously held for sale as of December 31, 2025.

By segment, second quarter impacts consisted of net losses of $35 million and $4 million at Optum Health and Optum Insight, respectively.

Year-to-date impacts consisted of gains of $524 million and $8 million at Optum Insight and Optum Rx, respectively, partially offset by a net loss of $341 million at Optum Health.

Gains and losses on portfolio actions were recorded within operating costs on the Condensed Consolidated Statements of Operations.

Restructuring and Other Actions

In the first quarter of 2026, restructuring and other items included a $400 million contribution to the United Health Foundation funded by the cash gain on the disposition of an Optum Insight business.

This was partially offset by a $137 million reduction of loss contract reserves established in the fourth quarter of 2025 and $59 million of net valuation gains on equity securities.

Restructuring and other actions resulted in an impact of $339 million at Optum Insight, partially offset by $135 million at Optum Health.

These items increased operating costs by $415 million, partially offset by an increase to investment and other income of $74 million and decreased medical costs of $137 million on the Condensed Consolidated Statements of Operations.

For the three and six months ended June 30, 2026, restructuring and other actions included the net decrease in loss contract reserves of $50 million and $187 million, respectively, and net valuation gains on equity securities of $1 million and $60 million, respectively, while the year-to-date results also included a $400 million contribution to the United Health Foundation funded by the cash gain on the disposition of an Optum Insight business.

By segment, the second quarter impact was $51 million at Optum Health.

Year-to-date impacts were $339 million at Optum Insight, partially offset by $186 million at Optum Health.

During the three months ended June 30, 2026, these items increased investment and other income by $1 million and decreased medical costs by $50 million.

For the six months ended June 30, 2026, these items increased operating costs by $415 million, partially offset by a $75 million increase to investment and other income and $187 million decrease in medical costs, as reflected on the Condensed Consolidated Statements of Operations.

Business Trends

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We expect overall spending on health care to continue to grow in the future, due to inflation, medical technology and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national interest in health and well-being.

The rate of market growth may be affected

by a variety of factors, including macroeconomic conditions and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.

The rate of market growth may be affected by a variety of factors, including macroeconomic conditions and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.

Pricing Trends.

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Continued increased medical costs may impact both future pricing and benefit design, including for our individual exchange products, and may result in shifts between product categories for our employer benefits.

These changes, along with certain regulatory impacts, have resulted in a reduction in people served in the first quarter and may continue in future periods.

These changes, along with certain regulatory impacts, have resulted in a reduction in people served and may continue in future periods.

Additionally, we have voluntarily pledged to rebate 2026 profits on our individual exchange products to customers as policymakers continue to work to determine how to improve affordability in this marketplace.

Medicare Advantage funding continues to be pressured, as discussed below in “Regulatory Trends and Uncertainties,” and we have observed a continued increase in care patterns and health care unit costs as discussed below in “Medical Cost Trends,” which we have contemplated in our 2026 benefit design approach.

Continued funding pressures have resulted in benefit and pricing actions, causing contraction in our Medicare Advantage membership in the first quarter, which we expect to continue throughout 2026.

Continued funding pressures have resulted in benefit and pricing actions, causing contraction in our Medicare Advantage membership, which we expect to continue throughout 2026.

Optum Health’s fully accountable value-based care businesses have been impacted by Medicare funding reductions and have also seen continued medical cost trend pressures, which may impact future pricing in the markets we continue to participate in.

As a result of increased pricing in response to anticipated care patterns in 2026, the exit from certain markets and decreased people served through UnitedHealthcare Medicare Advantage offerings, the number of people served under value-based care arrangements has contracted in the first quarter and is expected to continue throughout 2026.

Due to elevated care activity in Medicaid, specifically related to behavioral, pharmacy and home health, there continues to be a timing mismatch between the health status of people served and state rate updates.

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We continue to advocate for actuarially sound rates commensurate with our medical cost trends and we remain dedicated to partnering with those states that are committed to the long-term viability of their programs.

People served by Medicaid offerings has declined in the first quarter of 2026 due to reduced Medicaid eligibility with further contraction expected during the remainder of 2026 due to reduced Medicaid eligibility and the exit from one state.

People served by Medicaid offerings declined in the first half of 2026 due to the exit from one state and reduced Medicaid eligibility.

Medical Cost Trends.

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and the intensity of services delivered, which are driven by increases in provider pricing and additional services bundled per visit.

Commercial medical cost trend is elevated, in part due to the independent resolution process under the No Surprises Act and more aggressive billing practice among providers.

These trends may continue in future periods.

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As a result of ongoing Medicare funding pressures, there are adjustments we can make to partially offset these rate pressures and reductions for a particular period.

For example, we can seek to intensify our medical and operating cost management, make changes to the size and composition of our care provider networks, adjust member benefits and implement or increase the member premiums supplementing the monthly payments we receive from the government.

member premiums supplementing the monthly payments we receive from the government.

Additionally, we decide annually on a county-by-county basis where we will offer Medicare Advantage plans.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select first quarter 2026 year-over-year operating comparisons to first quarter 2025 and other financial results.

• Consolidated revenues grew 2%, UnitedHealthcare revenues grew 2% and Optum revenues were consistent.

• UnitedHealthcare served 1.1 million fewer people due to benefit design and pricing actions and reduced Medicaid eligibility.

The following summarizes select second quarter 2026 year-over-year operating comparisons to second quarter 2025 and other financial results.

• Consolidated revenues were consistent, with UnitedHealthcare revenues flat and Optum revenues lower by 2%.

• UnitedHealthcare served 1.6 million fewer people due to benefit design and pricing actions and reduced Medicaid eligibility and the exit from one state.

• Consolidated earnings from operations of $8.0 billion compared to $5.2 billion last year.

• Diluted earnings per common share were $6.04.

• Cash flows from operations for the three months ended March 31, 2026 were $8.9 billion.

• Cash flows from operations for the six months ended June 30, 2026 were $20.0 billion.

RESULTS SUMMARY

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(in millions, except percentages and per share data) Three Months Ended

March 31, Increase/

June 30, Increase/

(Decrease) Six Months Ended

June 30, Increase/

2026 2025 2026 vs.

2025 2026 2025 2026 vs.

Premiums $ 86,956 $ 87,905 $ (949) (1) % $ 174,517 $ 174,439 $ 78 — %

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Consolidated Financial Results

The increases in revenues were primarily driven by pricing trends at UnitedHealthcare and growth at Optum Rx, partially offset by decreased people served through Medicare Advantage, commercial risk-based offerings and Medicaid and a decrease in patients served under value-based arrangements at Optum Health.

The increases in revenues were primarily driven by pricing trends at UnitedHealthcare, partially offset by decreased people served through Medicare Advantage, commercial risk-based offerings and Medicaid and a decrease in patients served under value-based arrangements at Optum Health.

Medical Costs and MCR

Medical costs were consistent, with expected elevated medical cost trend offset by decreased people served across UnitedHealthcare and Optum Health and increased favorable reserve development.

The MCR decreased due to increased favorable reserve development, affordability initiatives and pricing trends, partially offset by expected elevated medical costs trend.

Medical costs decreased primarily due to fewer people served across UnitedHealthcare and Optum Health and favorable prior period reserve development, partially offset by elevated medical cost trend which remains above historical levels and continues to be affected by higher provider reimbursement under the No Surprises Act and increased service and coding intensity in commercial.

The MCR decreased due to favorable prior period reserve development, affordability and medical cost management initiatives, and pricing trends, partially offset by medical costs trend which remains above historical levels and continues to be affected by higher provider reimbursement under the No Surprises Act and increased service and coding intensity in commercial.

Operating Cost Ratio

The operating cost ratio increased primarily due to investments in people, process and technology to drive improved consumer and care provider experiences and greater operating efficiencies;

business mix and the impacts of restructuring and other actions;

partially offset by the revenue impacts of government programs, operating cost management and net portfolio divestitures in 2026.

The operating cost ratio increased primarily due to investments in people, process and technology to drive improved consumer and care provider experiences and greater operating efficiencies, and business mix;

partially offset by operating cost management and the revenue impacts of government programs.

For the six months ended June 30, 2026, the operating cost ratio also increased due the impacts of restructuring and other actions, partially offset by net portfolio divestitures in 2026.

The effective income tax rate increased as the rate for the three and six months ended June 30, 2025 was lower as a result of tax benefits having significantly more impact due to decreased pre-tax income, taxable earnings mix and the impact of the updated full year effective tax rate expectation.

Reportable Segments

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Three Months Ended

March 31, Increase/

June 30, Increase/

(Decrease) Six Months Ended

June 30, Increase/

(in millions, except percentages) 2026 2025 2026 vs.

2025 2026 2025 2026 vs.

UnitedHealthcare $ 86,017 $ 86,103 $ (86) — % $ 172,282 $ 170,720 $ 1,562 1 %

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Three Months Ended

March 31, Increase/

June 30, Increase/

(Decrease) Six Months Ended

June 30, Increase/

(in millions, except percentages) 2026 2025 2026 vs.

2025 2026 2025 2026 vs.

UnitedHealthcare Employer & Individual - Domestic $ 19,048 $ 18,950 $ 98 1 % $ 38,254 $ 38,016 $ 238 1 %

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The following table summarizes the number of people served by our UnitedHealthcare businesses, by major market segment and funding arrangement:

March 31, Increase/(Decrease)

June 30, Increase/(Decrease)

(in thousands, except percentages) 2026 2025 2026 vs.

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South American businesses held for sale 1,145 1,165 (20) (2) %

UnitedHealthcare’s revenues and earnings from operations increased due to pricing trends and actions, including increased Medicaid rates, and growth in people served through fee-based commercial offerings;

partially offset by a contraction in people served through Medicare Advantage, risk-based commercial offerings and Medicaid offerings;

For the three months ended June 30, 2026, UnitedHealthcare’s revenues decreased due to the contraction in people served through Medicare Advantage, risk-based commercial offerings and Medicaid offerings;

and our pledge to rebate profits on our individual exchange products to customers;

Earnings from operations also increased due to affordability initiatives and increased favorable reserve development, partially offset by investments to support future growth.

Total revenues decreased due to Optum Health, partially offset by growth in Optum Rx.

Earnings from operations decreased across the Optum segments.

partially offset by pricing trends and actions, including increased Medicaid rates, and growth in people served through fee-based commercial offerings.

For the six months ended June 30, 2026, revenues increased due to pricing trends and actions, including increased Medicaid rates, and growth in people served through fee-based commercial offerings, partially offset by the contraction in people served through Medicare Advantage, risk-based commercial offerings and Medicaid offerings;

and our pledge to rebate profits on our individual exchange products to customers.

Earnings from operations increased due to the revenue drivers discussed above, as well as favorable prior period reserve development, and affordability and medical cost management initiatives, partially offset by investments to support future growth.

Total revenues decreased due to Optum Health, partially offset by growth in Optum Insight.

For the six months ended June 30, 2026, the decrease in total revenues was partially offset by growth at Optum Rx.

Earnings from operations increased due to earnings growth at Optum Health.

The results by segment were as follows:

Revenues at Optum Health decreased primarily due to fewer patients served under value-based arrangements, partially offset by business combinations.

Earnings from operations decreased due to continued elevated medical cost trends, the impacts of net portfolio divestitures and investments to support future growth, partially offset by cost management, favorable reserve development and the reduction of loss contract reserves established in the fourth quarter of 2025.

Optum Health served approximately 93 million people and 95 million people as of March 31, 2026 and March 31, 2025, respectively.

Revenues at Optum Health decreased primarily due to fewer patients served under value-based arrangements and the impact of dispositions, partially offset by the impact of business combinations.

Earnings from operations increased due to cost management, increased favorable reserve development and the net decrease in loss contract reserves, partially offset by continued elevated medical cost trends, the impacts of net portfolio divestitures and investments to support future growth.

Optum Health served approximately 93 million people and 95 million people as of June 30, 2026 and June 30, 2025, respectively.

Optum Insight

Revenues at Optum Insight increased due to elevated investment and other income and growth in technology services, partially offset by lower volumes within business services.

Earnings from operations decreased due to investments in people, technology and new products;

the impacts of restructuring and other actions and lower volumes within business services;

partially offset by net portfolio divestitures in 2026, elevated investment and other income and growth in technology services.

Revenues at Optum Rx increased due to growth in specialty pharmacy partially offset by decreased script volume due to contraction in people served at UnitedHealthcare.

Earnings from operations decreased due to lower script volumes and investments in people, partially offset by growth in specialty pharmacy.

Optum Rx fulfilled 383 million and 408 million adjusted scripts in the first quarters of 2026 and 2025, respectively.

Revenues at Optum Insight increased due to elevated investment and other income and growth in business and technology services.

Earnings from operations for the three months ended June 30, 2026, increased due to growth in business services.

For the six months ended June 30, 2026, earnings from operations decreased due to investments in people, technology and new products and the impacts of restructuring and other actions, partially offset by net portfolio divestitures in 2026, elevated investment and other income and growth in business and technology services.

Revenues at Optum Rx for the three months ended June 30, 2026, decreased due to the reduced script volume as a result of the contraction in people served at UnitedHealthcare, partially offset by growth in retail and specialty pharmacy.

For the six months ended June 30, 2026, revenues increased due to growth in retail and specialty pharmacy, partially offset by reduced script volume as a result of the contraction in people served at UnitedHealthcare.

Earnings from operations decreased due to lower script volumes, partially offset by growth in specialty pharmacy.

Optum Rx fulfilled 387 million and 414 million adjusted scripts in the second quarters of 2026 and 2025, respectively.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Summary of our Major Sources and Uses of Cash and Cash Equivalents

Three Months Ended March 31, Increase/(Decrease)

Six Months Ended June 30, Increase/(Decrease)

(in millions) 2026 2025 2026 vs.

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Customer funds administered 332 — 332

Other 199 — 199

Total sources of cash 22,142 17,520 4,622

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Originations and purchases of loans, net of repayments and maturities (1,321) (1,637) 316

Customer funds administered — (25) 25

Other (1,755) (603) (1,152)

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2026 Cash Flows Compared to 2025 Cash Flows

Increased cash flows provided by operating activities were driven by legislative changes from the Inflation Reduction Act impacting pharmacy rebates and other changes in working capital accounts.

Other significant changes in sources or uses of cash year-over-year included decreased share repurchases, increased cash received from dispositions and decreased cash paid for acquisitions, offset by decreased issuances of short-term borrowings and long-term debt, increased net purchases of investments, decreased repayments of care provider loans and decreased customer funds administered.

Increased cash flows provided by operating activities were driven by increased earnings, timing of government payments, other favorable working capital dynamics and legislative changes from the Inflation Reduction Act impacting pharmacy rebates.

Other significant changes in sources or uses of cash year-over-year included decreased share repurchases, increased cash received from dispositions and decreased cash paid for acquisitions, offset by decreased issuances and increased repayments of short-term borrowings and long-term debt, increased net purchases of investments and decreased repayments of care provider loans.

Financial Condition

As of March 31, 2026, our cash, cash equivalent, available-for-sale debt securities and marketable equity securities balances of $80.0 billion included approximately $28.0 billion of cash and cash equivalents (of which $1.1 billion was available for general corporate use), $50.1 billion of debt securities and $1.9 billion of investments in marketable equity securities.

Additionally, we had $10.3 billion of loan receivables as of March 31, 2026.

As of June 30, 2026, our cash, cash equivalent, available-for-sale debt securities and marketable equity securities balances of $81.0 billion included approximately $28.6 billion of cash and cash equivalents (of which $1.1 billion was available for general corporate use), $50.3 billion of debt securities and $2.1 billion of investments in marketable equity securities.

Additionally, we had $10.8 billion of loan receivables as of June 30, 2026.

Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position.

Our available-for-sale debt securities portfolio had a weighted-average duration of 4.1 years and a weighted-average credit rating of “Double A” as of March 31, 2026.

Our available-for-sale debt securities portfolio had a weighted-average duration of 4.1 years and a weighted-average credit rating of “Double A” as of June 30, 2026.

When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.

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A summary of our cash requirements as of December 31, 2025 was disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 10-K.

During the three months ended March 31, 2026, there were no material changes to this previously disclosed information outside the ordinary course of business.

During the six months ended June 30, 2026, there were no material changes to this previously disclosed information outside the ordinary course of business.

We believe our capital resources are sufficient to meet future, short-term and long-term, liquidity needs.

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For more information on our commercial paper and bank credit facilities, see Note 5 of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2025 10-K.

As of March 31, 2026, we were in compliance with the various covenants under our bank credit facilities.

As of June 30, 2026, we were in compliance with the various covenants under our bank credit facilities.

Long-Term Debt.

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Credit Ratings.

Our credit ratings as of March 31, 2026 were as follows:

Our credit ratings as of June 30, 2026 were as follows:

Moody’s S&P Global Fitch A.M.

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Share Repurchase Program.

During the three months ended March 31, 2026, a counterparty purchased and held 1.7 million shares at an average price of $285.68 per share pursuant to forward share repurchase contracts.

During the six months ended June 30, 2026, we repurchased approximately 10.5 million shares at an average price of $344.08 per share, including 6.4 million shares purchased and held by a counterparty at an average price of $312.73 per share pursuant to forward share repurchase contracts that were settled on July 1, 2026.

See Note 6 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on the Company’s forward share repurchase contracts.

As of March 31, 2026, we had Board of Directors’ authorization to purchase up to 19.3 million shares of our common stock.

As of June 30, 2026, we had Board of Directors’ authorization to purchase up to 10.6 million shares of our common stock.

The Board of Directors from time to time may further amend the share repurchase program in order to increase the authorized number of shares which may be repurchased under the program.

Our quarterly cash dividend to shareholders reflects an annual rate of $8.84.

In June 2026, our Board of Directors increased our quarterly cash dividend to an annual rate of $9.28 compared to $8.84 per share, which we had paid since June 2025.

For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Pending Acquisitions.

As of March 31, 2026, we have entered into agreements to acquire companies in the health care sector, subject to regulatory approval and customary closing conditions, the majority of which are expected to close in the second half of 2026.

The total anticipated capital required for these acquisitions was approximately $3.0 billion.

In the first quarter of 2026, we entered into an agreement to acquire a company in the health care sector for $3.0 billion.

On July 2, 2026, we completed the acquisition for $1.5 billion in cash, with the remaining $1.5 billion payable within one year.

For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2025 10-K.

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changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits;

our ability to successfully execute initiatives designed to simplify and improve the consumer healthcare experience;

our ability to effectively execute our value-based care strategies;

the DOJ’s legal actions concerning our participation in the Medicare program;

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failure to complete, manage or integrate strategic transactions;

risk and uncertainties associated with the sale of our remaining operations in South America;

risks and uncertainties associated with the sale of our remaining operations in South America;

risks associated with public health crises arising from large-scale medical emergencies, pandemics, natural disasters and other extreme events;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis