11:11 AM EDT, 10/28/2025 (MT Newswires) -- UnitedHealth Group ( UNH ) raised its full-year earnings outlook on Tuesday as its third-quarter results surpassed analyst expectations despite higher medical costs and Medicare funding cuts.

The health insurance giant now anticipates adjusted earnings of at least $16.25 per share for 2025, up from its prior guidance of at least $16. Analysts surveyed by FactSet expect $16.21.

In July, UnitedHealth ( UNH ) projected full-year revenue of $445.5 billion to $448 billion. Wall Street is currently looking for full-year sales of $447.69 billion.

"We remain focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond, and our results this quarter reflect solid execution toward that goal," Chief Executive Stephen Hemsley said in Tuesday's earnings release.

For the September quarter, the company posted adjusted EPS of $2.92, compared with $7.15 a year earlier, exceeding the consensus of $2.80. Revenue grew 12% to $113.16 billion, just above analysts' $113.03 billion estimate.

UnitedHealth ( UNH ) said its medical care ratio, which is used to measure medical costs as a percentage of premium revenue, rose by 470 basis points year over year to 89.9%. The increase was driven by "significantly elevated cost trends, as well as the ongoing effects of the Biden-era Medicare funding reductions and changes to the Part D program from the Inflation Reduction Act," according to the earnings release.

Revenue in the UnitedHealthcare segment, which provides health care benefits, including those covered under Medicare and Medicaid, grew 16% to $87.1 billion. The Optum business, which serves the global health care marketplace, logged sales of $69.2 billion, up from $63.9 billion in the previous year.

The stock slipped 0.6% in Tuesday trade, and has lost 28% so far this year.

"External challenges will remain, including continued headwinds in 2026 from the third year of nearly $50 billion in industrywide Medicare cuts by the previous administration, as well as Medicare, Medicaid funding and program pressures," Hemsley said during an earnings call, according to a FactSet transcript. "Even so, I'm confident we will return to solid earnings growth next year given the operational rigor and more prudent pricing."

The company plans to issue its 2026 guidance in January along with fourth-quarter results, but Chief Financial Officer Wayne DeVeydt told analysts that UnitedHealth ( UNH ) is "comfortable" with current analyst estimates.

Wall Street is projecting EPS of $17.59 on revenue of $464.05 billion for 2026.

"Our repricing efforts will be a catalyst for earnings growth as we begin returning to our long-term target margins with particularly solid year-over-year results expected in our commercial and Medicare businesses," DeVeydt, whose appointment as CFO took effect on Sept. 2, said on the call.

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