Q3 2025 UnitedHealth Group Inc Earnings Call

Again recorded here's some important introductory information. This call contains forward looking statements under U S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports we file with the securities and exchange.

Commission, including the cautionary statements included in our current and periodic filings.

This call will also reference non-GAAP amounts a reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings report section of the company's Investor Relations page at Www Dot United Health Group Dot Com.

Speaker #1: Good morning and welcome to the UnitedHealth Group third quarter 2020 earnings conference call . A question and answer session will follow . UnitedHealth groups prepared remarks .

Operator: Good morning and welcome to the UnitedHealth Group Q3 2025 Earnings Conference Call. A question and answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here's some important introductory information. This call contains forward-looking statements under U.S. Federal Securities Laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amount is available on the Financial and Earnings Report section of the company's Investor Relations page at www.unitedhealthgroup.com.

Speaker #1: As a reminder , this call is being recorded . Here are some important introductory information . This call contains forward looking statements under US Federal securities laws .

Information presented on this call is contained in the earnings release, we issued this morning and in our form 8-K dated October 28, 2025, which may be accessed from the Investor Relations page of the company's website.

Speaker #1: These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations . A description of some of the risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission , including the cautionary statements included in our current and periodic filings .

I will now turn the conference over to the Chairman and Chief Executive Officer of Unitedhealth Group Stephen Hemsley.

Good morning, Thank you for joining us today.

Our enterprise continues to advance on the improvement path first discussed with you in July.

Speaker #1: This call will also reference non-GAAP amounts , a reconciliation of the non-GAAP to GAAP amount is available on the financial and earnings Reports section of the company's Investor Relations page at WW UNITEDHEALTH GROUP INC information presented on this call is contained in the earnings issued this morning , and in our form 8-K dated October 28th , 2025 , which may be accessed from the Investor Relations page of the company's website .

We have been introducing new leaders.

Strengthening underperforming businesses identifying both opportunities and inefficiencies.

And then importantly, recommitting to the mission and culture of this company.

Operator: Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated October 28, 2025, which may be accessed from the Investor Relations page of the company's website. I will now turn the conference over to the Chairman and Chief Executive Officer of UnitedHealth Group, Stephen Hemsley.

We're getting at the core of the underperformance issues with fresh perspectives intent on positioning our organization as a positive and innovative leader helping to advance the next era of health care.

Speaker #1: I will now turn the conference over to the Chairman and chief Executive Officer of UnitedHealth Group , Stephen Hemsley .

Akane sense of urgency in this effort is consistent throughout the enterprise at the same time, recognizing the pace of progress varies across our businesses, depending upon their challenges and opportunities.

Speaker #2: Good morning . Thank you for joining us today . Our enterprise continues to advance on the improvement paths . First discussed with you in July .

Stephen Hemsley: Good morning. Thank you for joining us today. Our enterprise continues to advance on the improvement paths first discussed with you in July. We've been introducing new leaders, strengthening underperforming businesses, identifying both opportunities and inefficiencies, and importantly, recommitting to the mission and culture of this company. We're getting at the core of the underperformance issues with fresh perspectives, intent on positioning our organization as a positive and innovative leader, helping to advance the next era of healthcare. A keen sense of urgency in this effort is consistent throughout the enterprise. At the same time, recognizing the pace of progress varies across our businesses, depending upon their challenges and opportunities. Some efforts will require more time and investment, others will show more immediate progress. Repricing within UnitedHealthcare is on track to drive solid operating earnings growth from margin improvement within that business in 2026.

Some efforts will require more time and investment others will show more immediate progress.

Speaker #2: We've been introducing new leaders , strengthening underperforming businesses , identifying both opportunities and and inefficiencies . And importantly , recommitting to the mission and culture of this company .

Pricing within United Healthcare is on track to drive solid operating earnings growth from margin improvement within that business in 2026.

Speaker #2: We're getting at the core of the underperformance issues with fresh perspectives intent on positioning our organization as a positive and innovative leader , helping to advance next era of health care .

In our less mature businesses, such as Optum health in Optum insight, our efforts to improve operations and make needed investments will show more measured progress in 2026, and we will take more time to fully bear fruit.

Speaker #2: A keen sense of urgency in this effort is consistent throughout the enterprise . At the same time , recognizing the pace of progress varies across our businesses .

As Patrick Conway will discuss our belief.

In the need for an impact of value based care remains intact.

Speaker #2: Depending upon their challenges and opportunities . Some efforts will require more time and investment . Others will show more immediate progress . Repricing within UnitedHealthCare is on track to drive solid operating earnings growth from margin improvement within that business in 2026 .

As is our confidence in returning to expected performance standards.

And throughout the company, we will ensure we are focused on activities that align with our long term future and be very disciplined about moving on from those that do not.

We're committed to returning to the consistent enterprise wide performance levels, you should expect of us.

Speaker #2: In our less mature businesses such as Optum Health and Optum Insight , our efforts to improve operations and make needed investments will show more measured progress in 2026 and will take more time to fully bear fruit as Patrick Conway will discuss our belief in the need for and impact of value based care remains intact , as is our confidence in returning to expected performance standards .

Stephen Hemsley: In our less mature businesses, such as Optum Health and Optum Insight, our efforts to improve operations and make needed investments will show more measured progress in 2026 and will take more time to fully bear fruit. As Patrick Conway will discuss, our belief in the need for and impact of value-based care remains intact, as is our confidence in returning to expected performance standards. Throughout the company, we will ensure we are focused on activities that align with our long-term future and be very disciplined about moving on from those that do not. We're committed to returning to the consistent enterprise-wide performance levels you should expect of us. Within Optum Health, the team has taken concrete steps that will refocus the business back to its original mission.

Within Optum health the team has taken concrete steps that will refocus the business back to its original mission.

Actions that will narrow networks with more emphasis on appropriately align physicians.

<unk>, the right clinical services and the right benefit offerings for the members we serve.

We are also keeping a sharp focus on the continued competitiveness of United healthcare.

Speaker #2: And throughout the company , we will ensure we are focused on activities that align with our long term future and be very disciplined about moving on from those that do not .

Evidenced by our recent Medicare star scores showing improvement year over year.

Our network remains intense now.

Now for payment year 2028 stars performance.

Speaker #2: We're committed to returning to the consistent , enterprise wide performance levels . You should expect of us . Within Optum Health . The team has taken concrete steps that will refocus the business back to its original mission .

As we look ahead to the next few years, we will consistently emphasize the fundamental execution discipline that has long been a key trade of this company.

I'm gratified to see the quick and enthusiastic response to this enterprise emphasis from our leadership team.

Speaker #2: Actions that will narrow networks with more emphasis on appropriately aligned physicians . Geographies , the right clinical services and the right benefit offerings for the members we serve .

Stephen Hemsley: Actions that will narrow networks with more emphasis on appropriately aligned physicians, geographies, the right clinical services, and the right benefit offerings for the members we serve. We are also keeping sharp focus on the continued competitiveness of UnitedHealthcare, as evidenced by our recent Medicare STARS score showing improvement year over year, and that work remains intense, now for payment year 2028 STARS performance. As we look ahead to the next few years, we will consistently emphasize the fundamental execution discipline that has long been a key trait of this company. I'm gratified to see the quick and enthusiastic response to this enterprise, this emphasis from our leadership team. External challenges will remain, including continued headwinds in 2026 from the third year of nearly $50 billion in industry-wide Medicare cuts by the previous administration, as well as Medicaid funding and program pressures.

External challenges will remain including continued headwinds in 2026.

From the third year of nearly $50 billion in industry wide Medicare cuts by the previous administration.

Speaker #2: We are also keeping sharp focus on the continued competitiveness of UnitedHealthCare , as evidenced by our recent Medicare Stars score showing improvement year over year .

As well as Medicare Medicaid funding in program pressures.

Speaker #2: And that work remains intense . Now for payment year 2028 stars performance . As we look ahead to the next few years , we will consistently emphasize the fundamental execution discipline that has long been a key trait of this company , and I'm gratified to see the quick and enthusiastic response to this enterprise .

Even so I'm confident we will return to solid earnings growth next year, given the operational rigor and more prudent pricing.

While we are still finalizing 2026 plans and intend to share full guidance with you in January.

Current analyst consensus captures a likely stepping off point for next year, we intend to balance our earnings growth ambitions in 2026, with the investments and actions that will drive higher and sustainable double digit growth beginning in 2027 and advancing from there.

Speaker #2: This emphasis from our leadership team. External challenges will remain, including continued headwinds in 2026 from the third year of nearly $50 billion in industry-wide Medicare cuts by the previous administration, as well as Medicare and Medicaid funding and program pressures.

That is the perspective, we're keeping out keep in front of mind.

Longer term outlook will be refreshed as we continue to execute over the next year.

Speaker #2: Even so . I'm confident we will return to solid earnings growth next year given the operational rigor and more prudent pricing . While we are still finalizing 2026 plans and intend to share full guidance with you in January , current analysts consensus captures a likely stepping off point for next year .

Stephen Hemsley: Even so, I'm confident we will return to solid earnings growth next year, given the operational rigor and more prudent pricing. While we are still finalizing 2026 plans and intend to share full guidance with you in January, current analyst consensus captures a likely stepping-off point for next year. We intend to balance our earnings growth ambitions in 2026 with investments and actions that will drive higher and sustainable double-digit growth beginning in 2027 and advancing from there. That is the perspective we're keeping front of mind. Our longer-term outlook will be refreshed as we continue to execute over the next year. As we've been doing these last few months, we will continue to engage actively with both investors and the broader stakeholder community and plan to convene our investor conference in the back half of 2026.

As we've been doing these last few months, we will continue to engage actively with both investors and the broader stakeholder community and plan to convene our Investor conference in the back half of 2026.

This morning, Tim No and Patrick economy will provide details on the progress of Unitedhealthcare and Optum respectively.

Speaker #2: We intend to balance our earnings growth ambitions in 2026 with investments and actions that will drive higher and sustainable double-digit growth, beginning in 2027 and advancing from there.

Our Chief Financial Officer, Wayne device will review third quarter results I'm.

I am pleased to welcome <unk> to our leadership team. He has the right experience values and expertise to help guide Unitedhealth group at this moment in our development and he is off to a fast start so with that Tim and I take it.

Speaker #2: That is the perspective we're keeping out . Keeping front of mind our longer term outlook will be refreshed as we continue to execute over the next year , as we've been doing these last few months , we will continue to engage actively with both investors and the broader stakeholder community and plan to convene our investor conference in the back half of 2026 .

Thanks, Steve.

For the current year overall Unitedhealthcare performance remains in line with expectations, we offered in the second quarter.

Medical cost trends remain historically high but consistent with our second quarter guidance and we expect that to continue throughout the remainder of 2025.

Speaker #2: This morning , Tim Knoll and Patrick Conway will provide details on the progress of UnitedHealthCare and Optum , respectively . Our chief Financial officer , Wayne Devitt , will review third quarter results .

Stephen Hemsley: This morning, Tim Noel and Patrick Conway will provide details on the progress of UnitedHealthcare and Optum, respectively. Our Chief Financial Officer, Wayne DeVite, will review third quarter results. I'm pleased to welcome Wayne to our leadership team. He has the right experience, values, and expertise to help guide UnitedHealth Group at this moment in our development, and he's off to a fast start. Tim, you want to take it?

Turning to our efforts for 2026, a vital element has been our pricing.

Speaker #2: I'm pleased to welcome Wayne to our leadership He is the right experience , values and expertise to help guide UnitedHealth Group at this moment in our development .

Since our last update with you we've repriced the vast majority of our UHC risk businesses.

Including Medicare advantage and to varying degrees, our commercial fully insured and residual AC offerings.

Speaker #2: And he's off to a fast start . So with that , Tim , do you want to take it ?

Speaker #3: Thanks , Steve , for the current year overall , UnitedHealthCare performance remains in line with expectations . We offered in the second quarter .

Tim Noel: Thanks, Steve. For the current year, overall UnitedHealthcare performance remains in line with the expectations we offered in the second quarter. Medical cost trends remain historically high, but consistent with our second quarter guidance, and we expect that to continue throughout the remainder of 2025. Turning to our efforts for 2026, a vital element has been our pricing. Since our last update with you, we've repriced the vast majority of our UnitedHealthcare risk businesses, including Medicare Advantage and, to varying degrees, our commercial fully insured and residual ACA offerings. Trend experience for the third quarter continues to validate the actuarial forecasts underpinning our 2026 pricing actions. Taken together, these actions position each of our businesses on a clear path towards margin growth in 2026, with the exception of Medicaid, which I will discuss in a moment.

Trend experienced in the third quarter continues to validate the actuarial forecast underpinning our 2026 pricing actions.

Speaker #3: Medical cost trends remain historically high , but consistent with our second quarter guidance , and we expect that to continue throughout the remainder of 2025 .

Taken together these actions position each of our businesses on a clear path towards margin growth in 2026, with the exception of Medicaid, which I will discuss in a moment.

Speaker #3: Turning to our efforts for 2026 , a vital element has been our pricing since our last update with you . We've repriced the vast majority of our UHC risk businesses , including Medicare Advantage and to varying degrees , our commercial fully insured and residual ACA offerings trend experienced through the third quarter continues to validate the actuarial forecasts underpinning our 2026 pricing actions taken together , these actions position each of our businesses on a clear path towards margin growth in 2026 .

Our Medicare business continues to perform in line with the expectations, we shared last quarter.

That's true for care activity and medical cost trends and importantly for the mix of clinical activity and utilization across physician outpatient and inpatient.

We forecast our full year 2025, a trend of approximately seven 5% in Medicare advantage.

Distant with our previous expectations.

As we shared with you last quarter.

Trend remains elevated across Medicare overall, with our med sup offerings still seeing medical cost trends in excess of 11%.

Speaker #3: With the exception of Medicaid, which I will discuss in a moment, our Medicare business continues to perform in line with the expectations we shared last quarter.

Tim Noel: Our Medicare business continues to perform in line with the expectations we shared last quarter. That's true for care activity and medical cost trends, and importantly, for the mix of clinical activity and utilization across physician, outpatient, and inpatient. We forecast a full year 2025 trend of approximately 7.5% in Medicare Advantage, consistent with our previous expectations. As we shared with you last quarter, the trend remains elevated across Medicare overall, with our MedSupp offerings still seeing medical cost trends in excess of 11%. In individual Medicare Advantage, we continue to believe an expected 10% medical cost trend for 2026 has us positioned appropriately. This trend assumption reflects a continuation of the elevated care activity levels observed in 2025, known impacts from fee schedule changes, and continued expansion of aggressive provider coding and billing practices.

And individual Medicare advantage, we continue to believe an expected 10% medical cost trend for 2026 has us positioned appropriately this.

Speaker #3: That's true for care , activity and medical cost trends . And importantly , for the mix of clinical activity and utilization across physician outpatient and inpatient .

This trend assume assumption reflects a continuation of the elevated cure activity levels observed in 2025.

Speaker #3: We forecast a full year 2025 trend of approximately 7.5% in Medicare Advantage . Consistent with our previous expectations . As we shared with you last quarter , trend remains elevated across Medicare overall , with our med Sup offerings still seeing medical cost trends in excess of 11% in individual Medicare Advantage , we continue to believe and 10% medical cost trend for 2026 has us positioned appropriately .

Known impacts from fee schedule changes and continued expansion.

Provider coding and billing practices we.

We have taken a similarly prudent view across all our Medicare product offerings for 2026, including Medicare supplement group MA and Standalone part D.

For Medicare advantage, we're now about two weeks into the annual enrollment period and early results are in line with our strategic positioning for 2026.

Our plan for next year reflects a conservative path for focused on margin growth.

Speaker #3: This trend assumes assumption reflects a continuation of the elevated care activity levels observed in 2025 , known impacts from fee schedule changes and continued expansion of aggressive provider coding and billing practices .

Made significant adjustments to benefits and executed targeted planned exits and network reductions to offset elevated medical trends and government funding decreases.

As a result of our planned actions as well as competitive market dynamics, we expect membership contraction of approximately 1 million members in total Medicare advantage, including individual and group markets.

Speaker #3: We have taken a similarly prudent view across all our Medicare product offerings for 2026 , including Medicare supplement Group , Mar and standalone part D for Medicare Advantage .

Tim Noel: We have taken a similarly prudent view across all our Medicare product offerings for 2026, including Medicare Supplement, Group MA, and Standalone Part D. For Medicare Advantage, we're now about two weeks into the annual enrollment period, and early results are in line with our strategic positioning for 2026. Our plan for next year reflects a conservative path focused on margin growth. We made significant adjustments to benefits and executed targeted plan exits and network reductions to offset elevated medical trends and government funding decreases. As a result of our plan actions, as well as competitive market dynamics, we expect membership contraction of approximately 1 million members in total Medicare Advantage, including individual and group markets.

Speaker #3: We're now about two weeks into the annual enrollment period and early results are in line with our strategic positioning for 2026 . Our plan for next year reflects a conservative path focused on margin growth .

We expect these actions will drive Marvin margin improvements in 2026.

With potential for further advancements in 2027 that will position us to reach the upper half of our 2% to 4% targeted margin range all of which is supported by strong stars results.

Speaker #3: We made significant adjustments to benefits and executed targeted plan exits and network reductions to offset elevated medical trends and government funding decreases as a result of our plan actions , as well as competitive market dynamics , we expect membership contraction of approximately 1 million members in total .

As Steve mentioned earlier, we already have shifted focus to the next stars performance period.

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Turning to commercial we are focused on pricing and cost management efforts to support 2026 margin recovery.

Speaker #3: Medicare Advantage , including individual and group markets . We expect these actions will drive margin margin improvements in 2026 , with potential for further advancements in 2027 that will position us to reach the upper half of our 2% to 4% targeted margin range , all of which is supported by strong Star's results .

At this point approximately 60% of our group commercial insured offerings have been priced for next year.

Tim Noel: We expect these actions will drive margin improvements in 2026, with potential for further advancements in 2027 that will position us to reach the upper half of our 2% to 4% targeted margin range, all of which is supported by strong STARS results. As Steve mentioned earlier, we already have shifted focus to the next STARS performance period, including incremental investments made in the fourth quarter. Turning to commercial, we are focused on pricing and cost management efforts to support 2026 margin recovery. At this point, approximately 60% of our group commercial insured offerings have been priced for next year. Our commercial pricing reflects the elevated cost levels we've seen this year, which we expect to persist in 2026. While we expect our group fully insured business to contract in line with the broader market, we continue to see strong traction for our self-funded offerings.

Our current commercial pricing reflects the elevated cost levels, we have seen this year, which we expect to persist in 2026.

While we expect our group fully insured business to contract in line with the broader market. We continued to see strong traction for our self funded offerings.

Speaker #3: As Steve mentioned earlier , we already have shifted focus to the next stars performance period , including incremental investments made in the fourth quarter .

We expect the vast majority of our employer insurance businesses to be repriced for 2026, and a return to our normal margin range in 2027.

Speaker #3: Turning to commercial, we are focused on pricing and cost management efforts to support 2026 margin recovery. At this point, approximately 60% of our group commercial insured offerings have been priced for next year.

Moving to HCA markets, we have submitted rate filings in nearly all of the 30 states, where we participate that reflect 2025 morbidity and experience.

Speaker #3: Our commercial pricing reflects the elevated cost levels we've seen . This year , which we expect to persist in 2026 . While we expect our group fully insured business to contract in line with the broader market , we continue to see strong traction for our self-funded offerings .

These include average rate increases of over 25%.

Where we are unable to reach agreement on sustainable rates, we are enacting targeted service area reductions.

These actions will establish a sustainable premium base, while likely reducing our ACA enrollment by approximately two thirds.

Speaker #3: We expect the vast majority of our employer insurance businesses to be repriced for 2026, and to return to our normal margin range in 2027.

Tim Noel: We expect the vast majority of our employer insurance businesses to be repriced for 2026 and to return to our normal margin range in 2027. Moving to ACA markets, we have submitted rate filings in nearly all of the 30 states where we participate that reflect 2025 morbidity and experience. These include average rate increases of over 25%. Where we are unable to reach agreement on sustainable rates, we are enacting targeted service area reductions. We believe these actions will establish a sustainable premium base while likely reducing our ACA enrollment by approximately two-thirds. These actions should drive margin improvement in our Employer & Individual segment in 2026, though still below our targeted 7% to 9% range. In Medicaid, the path to recovery will be more challenging.

These actions should drive margin improvement and our employer and individual segment in 2026, though still below our targeted 7% to 9% range.

Speaker #3: Moving to ACA markets , we have submitted rate filings in nearly all of the 30 states where we participate that reflect 2025 morbidity and experience .

In Medicaid the path to recovery will be more challenging states have not funded in line with actual cost trends. So funding levels are not sufficient to cover the health needs of state enrollees.

Speaker #3: These include average rate increases of over 25% , where we are unable to reach agreement on sustainable rates . We are enacting targeted service area reductions .

While we are making steady progress and bridging this gap with states.

The mismatch between rate adequacy, and remember acuity will likely extend through 2026.

Speaker #3: We believe these actions will establish a sustainable premium base while likely reducing our ACA enrollment by approximately two-thirds. These actions should drive margin improvement in our employer and individual segments.

To date, we have received 2026 draft rates on almost half of our contracts, which have a January 1st rate cycle, and we continue to advocate for rate updates to better reflect our ongoing experience with elevated trends.

Speaker #3: In 2026 , though still below our targeted 7 to 9% range in Medicaid . The path to recovery will be more challenging . States have not funded in line with actual cost trends , so funding levels are not sufficient to cover the health needs of state enrollees .

Our team is focused on addressing drivers' unique to these markets, especially behavioral health and we'll continue to push for appropriate funds.

Tim Noel: States have not funded in line with actual cost trends, so funding levels are not sufficient to cover the health needs of state enrollees. While we're making steady progress in bridging this gap with states, the mismatch between rate adequacy and member acuity will likely extend through 2026. To date, we have received 2026 draft rates on almost half of our contracts, which have a January 1st rate cycle, and we continue to advocate for rate updates to better reflect our ongoing experience with elevated trends. Our team is focused on addressing drivers unique to these markets, especially behavioral health, and will continue to push for appropriate funds. As I said last quarter, wherever states support responsible funding for Medicaid, we remain committed to serving people through that program and view this as integral to our mission.

As I said last quarter wherever states support responsible funding for Medicaid we remain committed to serving people through that program and view this as integral to our mission.

Speaker #3: While we're making steady progress in bridging this gap with states , the mismatch between rate adequacy and member acuity will likely extend through 2026 .

As we indicated in July we anticipate Medicare margins will be breakeven for 2025.

Speaker #3: To date , we have received 2026 draft rates on almost half of our contracts , which have a January 1st rate cycle , and we continue to advocate for rate updates to better reflect our ongoing experience with elevated trend .

As we look to 2026, we expect margins to decline further.

Listing cost trends continue and the current rate environment does not change.

Yeah.

Speaker #3: Our team is focused on addressing drivers unique to these markets, especially behavioral health, and will continue to push for appropriate funds.

Looking at Unitedhealthcare overall, the underlying business continues to perform well and serving consumers plans and program sponsors.

Speaker #3: As I said last quarter , wherever states support responsible funding for Medicaid , we remain committed to serving people through that program and view this as integral to our mission .

To give you some examples of how we are enhancing the experience for these cohorts.

Nearly 85% of member inquiries are served digitally.

<unk> call US 90% of calls are answered within 30 seconds and 95% of members questions are resolved and the first interaction.

Speaker #3: As we indicated in July, we anticipate Medicare margins will be break-even for 2025. As we look to 2026, we expect margins to decline further if existing cost trends continue and the current rate environment does not change.

Tim Noel: As we indicated in July, we anticipate Medicare margins will be break-even for 2025. As we look to 2026, we expect margins to decline further if existing cost trends continue and the current rate environment does not change. Looking at UnitedHealthcare overall, the underlying business continues to perform well in serving consumers, plans, and program sponsors. To give you some examples of how we're enhancing the experience for these cohorts, nearly 85% of member inquiries are served digitally. When members call us, 90% of calls are answered within 30 seconds, and 95% of members' questions are resolved in the first interaction. Some 95% of our claims are automatically processed immediately. We're delivering more value, ease, simplicity, and guidance throughout the UnitedHealthcare member experience. We're also aggressively scaling AI and machine learning capabilities to enhance these experiences and optimize core performance.

Some 95% of our claims are automatically processed immediately.

We're delivering more value ease simplicity and guidance throughout the UHC member experience where.

Speaker #3: Looking at UnitedHealthcare overall, the underlying business continues to perform well in serving consumers, plans, and program sponsors. To give you some examples of how we are enhancing the experience for these cohorts, nearly 85% of member inquiries are served digitally when members call us, 90% of calls are answered within 30 seconds, and 95% of members' questions are resolved in the first interaction.

We're also aggressively scaling AI and machine learning capabilities to enhance these experiences and optimize core performance.

While 2025 remains a transition year. The pressure we experienced is largely a result of mispricing and suboptimal market positioning.

We remain humbled by the challenges of this environment and the lessons we've had to learn once again, but confident that we are in solid footing to recapture our performance potential.

Speaker #3: Some 95% of our claims are automatically processed immediately . We're delivering more value , ease , simplicity , and guidance throughout the member experience .

With that I'll turn it over to Patrick Conway CEO of Optum.

Thanks, Tim I will spend the majority of my time today updating you on our efforts to restore <unk> to its original intent around value based care.

Speaker #3: We're also aggressively scaling AI and machine learning capabilities to enhance these experiences and optimize core performance. While 2025 remains a transition year, the pressure we experienced is largely a result of mispricing and suboptimal market positioning.

Which experience continues to show US is the optimal model to deliver the right care at the right time in the right setting for the best outcomes at the lowest cost to the people we serve particularly.

Tim Noel: While 2025 remains a transition year, the pressure we experienced is largely a result of mispricing and suboptimal market positioning. We remain humbled by the challenges of this environment and the lessons we've had to learn once again, but confident that we are in solid footing to recapture our performance potential. With that, I'll turn it over to Patrick Conway, CEO of Optum.

Particularly in light of current cost trends in the market dominance of the large health systems.

Speaker #3: We remain humbled by the challenges of this environment and the lessons we've had to learn once again. But we are confident that we are on solid footing to recapture our performance potential.

Over the last few years through a period of rapid expansion Optum health strategy around value based care strayed from the initial intent of the model.

Speaker #3: With that , I'll turn it over to Patrick Conway , CEO of Optum .

Three critical issues emerged first the provider network grew too large.

Speaker #2: Thanks , Tim . I will spend the majority of my time today updating you on our efforts to restore health to its original intent around value based care , which experienced continues to show us is the optimal model to deliver the right care at the right time and the right setting for the best outcomes at the lowest cost to the people we serve , particularly in light of current cost trends and the market dominance of the large health systems over the last few years through a period of rapid expansion , Optum health strategy around value based care strayed from the initial intent of the model .

Stephen Hemsley: Thanks, Tim. I will spend the majority of my time today updating you on our efforts to restore Optum Health to its original intent around value-based care, which experience continues to show us is the optimal model to deliver the right care at the right time and the right setting for the best outcomes at the lowest cost to the people we serve, particularly in light of current cost trends and the market dominance of the large health systems. Over the last few years, through a period of rapid expansion, Optum Health's strategy around value-based care strayed from the initial intent of the model. Three critical issues emerged. First, the provider network grew too large. Second, the rapid pace of expansion and slower pace of integration resulted in operating inconsistencies, exacerbated by relying too much on affiliated physicians who are less aligned with core VBC policies.

The rapid pace of expansion and slower pace of integration resulted in operating inconsistency is.

Exacerbated by relying too much on affiliated physicians or less aligned with core BBC policies, and lastly, Optima health was accepting risk in products and services less suited for a clinically oriented value based model.

Understanding these issues has helped us better pursue the steps needed to get back to the original intent of Optum health and value based care.

Over the past six months, we have made significant leadership changes to better drive an integrated BBC provider model.

Speaker #2: Three critical issues emerged . First , the provider network grew too large . Second , the rapid pace of expansion and slower pace of integration resulted in operating inconsistencies , exacerbated by relying too much on affiliated physicians who are less aligned with core BBC policies .

Under the leadership of Kristen Nelson, our Chief operating officer, we are focusing our efforts on three key connected areas to drive better performance.

Returning to the original intended clinical framework that best supports BBC.

Speaker #2: And lastly , Optum Health was accepting risk in products and services less suited for a clinically oriented , value based model . Understanding these issues has helped us better pursue the steps needed to get back to the original intent of Optum Health and value based care .

Stephen Hemsley: Lastly, Optum Health was accepting risk in products and services less suited for a clinically oriented value-based model. Understanding these issues has helped us better pursue the steps needed to get back to the original intent of Optum Health and value-based care. Over the past six months, we have made significant leadership changes to better drive an integrated VBC provider model. Under the leadership of Krista Nelson, our Chief Operating Officer, we are focusing our efforts on three key connected areas to drive better performance. First, returning to the original intended clinical framework that best supports VBC. Second, moving towards a narrower, more integrated, and dedicated value-based care provider model and network. Third, focusing on the appropriate managed benefit product and patient base. Within this framework, our team has made solid progress, especially in bringing greater discipline to how we approach risk arrangements, which will benefit the business in 2026.

Second moving towards narrower more integrated and dedicated value based care provider model and network and.

And third focusing on the appropriate managed benefit product and patient base.

Within this framework our team has made solid progress, especially in bringing greater discipline to how we approach risk arrangements, which will benefit the business in 2026.

Speaker #2: Over the past six months, we have made significant leadership changes to better drive and integrate the BBC provider model. Under the leadership of Krista Nelson, our Chief Operating Officer, we are focusing our efforts on three key connected areas to drive better performance.

This includes partnering with payers on benefit adjustments and appropriate rates to match the risk and mix of the populations we serve.

Speaker #2: First , returning to the original intended clinical framework that best supports BBC . Second , moving towards narrower , more integrated and dedicated value based care provider model and network , and third , focusing on the appropriate managed benefit product and patient base .

At this point, we are close to completion and over 90% of our value based payer contracts for next year and are on track to reach our goal of offsetting approximately half of the 2026, B 28 headwind through payer contracting.

We are also pursuing market and product exits, including from lower performing PPO contracts.

Speaker #2: Within this framework, our team has made solid progress, especially in bringing greater discipline to how we approach risk arrangements, which will benefit the business in 2026.

As indicated last quarter, we have finalized exits for 200000 lives in 2026, the majority of which are PPO.

Speaker #2: This includes partnering with payers on benefit adjustments and appropriate rates to match the risk and mix of the populations we serve . At this point , we are close to completion and over 90% of our value based payer contracts for next year and are on track to reach our goal of offsetting approximately half of the 20 26 v 28 headwind through payer contracting .

Stephen Hemsley: This includes partnering with payers on benefit adjustments and appropriate rates to match the risk and mix of the populations we serve. At this point, we are close to completion in over 90% of our value-based payer contracts for next year and are on track to reach our goal of offsetting approximately half of the 2026 B28 headwind through payer contracting. We are also pursuing market and product exits, including from lower performing PPO contracts. As indicated last quarter, we have finalized exits for 200,000 lives in 2026, the majority of which are PPO. While still early in the Medicare annual enrollment period, we expect total Optum Health value-based care membership to shrink by approximately 10% in 2026 before returning to growth in 2027. We also continue to intentionally shape our care provider network to prioritize high-performing partners who demonstrate strong patient engagement and consistently positive outcomes.

While still early in the Medicare annual enrollment period, we expect total Optum health value based care membership to shrink by approximately 10% in 2026 before returning to growth in 2027.

We also continue to intentionally shape, our care provider network to prioritize high performing partners, who demonstrate strong patient engagement and consistently positive outcomes. We are moving to employed are contractually dedicated positions wherever possible we.

Speaker #2: We are also pursuing market and product exits , including from lower performing PPO contracts . As indicated last quarter , we have finalized exits for 200,000 lives in 2026 .

We are separating from providers, who are less aligned with the BBC model.

The targeted network actions, we've taken over the last 60 days will result in fewer providers in our network starting in 2026.

Speaker #2: The majority of which are PPO . While still early in the Medicare annual enrollment period , we expect total Optum health value based care membership to shrink by approximately 10% in 2026 .

Within our markets and their related networks, we are working to more fully integrate our clinical practices to ensure greater performance consistency.

Speaker #2: Before returning to growth in 2027 . We also continue to intentionally shape our care provider network to prioritize high performing partners who demonstrate strong patient engagement and consistently positive outcomes .

The team is refining our portfolio and accelerating a consistent national operating model for regionally led high performing Optum health practices that reduces fixed cost drives purchasing economies align technology.

Speaker #2: We are moving to employed or contractually dedicated physicians wherever possible . We are separating from providers who are less aligned with the BBC model .

Stephen Hemsley: We are moving to employed or contractually dedicated positions wherever possible. We are separating from providers who are less aligned with the VBC model. The targeted network actions we've taken over the last 60 days will result in fewer providers in our networks starting in 2026. Within our markets and their related networks, we are working to more fully integrate our clinical practices to ensure greater performance consistency. The team is refining our portfolio and accelerating a consistent national operating model for regionally led, high-performing Optum Health practices that reduces fixed cost, drives purchasing economies, aligns technology, and most importantly, ensures continued high-quality care. These actions increase our confidence in our ability to meet our V28 cost reduction targets in 2026 and strengthen our operating foundations for the long term.

And most importantly ensures continued high quality care.

These actions increase our confidence in our ability to meet our <unk> 28 cost reduction targets.

Speaker #2: The targeted network actions we've taken over the last 60 days will result in fewer providers and our network starting in 2026 . Within our markets , and their related networks .

<unk> thousand 26, and strengthen our operating foundations for the long term.

Lastly, our engagements in clinical work at Optum continue to track with our expectations for meaningfully reducing medical cost trends engaging with over 85% of our high risk members in 2025, which accounts for the remaining 28 pressure offsets in 2026.

Speaker #2: We are working to more fully integrate our clinical practices to ensure greater performance , consistency . The team is refining our portfolio and accelerating a consistent national operating model for regionally led , high performing Optum health practices that reduces fixed costs , drives purchasing economies , aligns technology and most importantly , ensures continued high quality care .

Bottom line getting back to the basics of our BBC model will be good for the people, we serve and for our business.

Speaker #2: These actions increase our confidence in our ability to meet our V 28 cost reduction targets in 2026 and strengthen our operating foundations for the long term .

The point of reference our 2026, CMS star rating projections, so 80% of optimal at home members and four plus star plans and nearly 100% of our ice nib members and four plus star plan.

Speaker #2: Lastly , our engagements and clinical work at Optum continue to track with our expectations for meaningfully reducing medical cost trends . Engaging with over 85% of our high risk members in 2025 , which accounts for the remaining 28 pressure offsets in 2026 .

Stephen Hemsley: Lastly, our engagements and clinical work at Optum continue to track with our expectations for meaningfully reducing medical cost trends, engaging with over 85% of our high-risk members in 2025, which accounts for the remaining B28 pressure offsets in 2026. Bottom line, getting back to the basics of our VBC model will be good for the people we serve and for our business. As a point of reference, our 2026 CMS STARS rating projections show 80% of Optum at-home members in 4+ STARS plans and nearly 100% of our I-SNP members in 4+ STARS plans. Evidence of our quality of care is underscored by a strong NPS of 90 at our highest performing facilities. For the third quarter, Optum Health performance was in line with our expectations, reflecting the natural seasonality in our business and the pull forward of some investments.

Evidence of our quality of care is underscored by a strong NPS of 90 at our highest performing facilities.

For the third quarter Optum health performance was in line with our expectations, reflecting the natural seasonality in our business and the pull forward of some investments.

Speaker #2: Bottom line getting back to the basics of our BBC model will be good for the people we serve and for our business . As a point of reference , our 2026 CMS star rating projections show 80% of optimal at home members and four plus star plans , and nearly 100% of our members and four plus star plans .

Within this we expect to end 2025 with margins of just under 3%, which includes value based care margins under 1%.

We expect margin margin improvement across all of Optum health in 2026, even in the face of the third year of Medicare funding cuts.

We believe these efforts will drive further acceleration in 2027 towards our long term margin targets of 6% to 8%.

Speaker #2: Evidence of our quality of care is underscored by a strong NPS of 90 at our highest performing facilities for the third quarter , Optum Health Performance was in line with our expectations , reflecting the natural seasonality in our business and the pull forward of some investments within this , we expect to end 2025 with margins of just under 3% , which includes value based care margins under 1% .

Turning to Optum health fee based care services as we discussed last time these were not performing to their potential.

We are adopting more consistent and rigorous processes to better manage these practices for growth and appropriate profitability.

Stephen Hemsley: Within this, we expect to end 2025 with margins of just under 3%, which includes value-based care margins under 1%. We expect margin improvement across all of Optum Health in 2026, even in the face of the third year of the Medicare funding cuts. We believe these efforts will drive further acceleration in 2027 towards our long-term margin targets of 6 to 8%. Turning to Optum Health's fee-based care services, as we discussed last time, these were not performing to their potential. We are adopting more consistent and rigorous processes to better manage these practices for growth and appropriate profitability. We are seeing early results in our East region, which serves nearly 5 million patients, where we have generated a 3% per visit productivity increase quarter over quarter, driven by targeted improvements in scheduling, workflow efficiency, and patient acquisition.

We are seeing early results in our east region, which serves nearly 5 million patients, where we have generated a 3% per visit productivity increase quarter over quarter, driven by targeted improvements in scheduling workflow efficiency and patient acquisition.

Speaker #2: We expect margin margin improvement across all of Optumhealth in 2026 . Even in the face of the third year of the Medicare funding cuts .

Speaker #2: We believe these efforts will drive further acceleration in 2027 towards our long-term margin targets of 6% to 8%, turning to OptumHealth fee-based care services.

We have similar undertakings in motion in our south and west regions.

As for Optum insight, we continue to perform solidly, but not at the level of the potential for these services.

Speaker #2: As we discussed last time, these were not performing to their potential. We are adopting more consistent and rigorous processes to better manage these practices for growth and appropriate profitability.

Under the leadership of Sandeep <unk>, we now see the alignment of our end to end technology and AI innovation efforts coming into formation.

Speaker #2: We are seeing early results in our East region , which serves nearly 5 million patients , where we have generated a 3% per visit productivity increase quarter over quarter , driven by targeted improvements in scheduling , workflow efficiency and patient acquisition .

We will make the investments needed to accelerate the advancement of this distinctive platform that's <unk>.

Serves the expanse of the health system.

We are confident in our plan will ignite topline revenue and operating earnings in line with our long term growth targets.

Speaker #2: We have similar undertakings in motion and our South and West regions . As for Optum , Insight , we continue to perform solidly , but not at the level of the potential for these services under the leadership of Sandeep Dudani , we now see the alignment of our end to end technology and AI innovation efforts coming into formation .

Stephen Hemsley: We have similar undertakings in motion in our South and West regions. As for Optum Insight, we continue to perform solidly, but not at the level of the potential for these services. Under the leadership of Sandeep Dadlani, we now see the alignment of our end-to-end technology and AI innovation efforts coming into formation. We will make the investments needed to accelerate the advancement of this distinctive platform that serves the expanse of the health system. We are confident in our plan will ignite top-line revenue and operating earnings in line with our long-term growth targets. At Optum Rx, we continue to perform well with double-digit revenue growth in our pharmacies and a strong selling season for our pharmacy offerings. Our products are resonating in the market with stronger customer retention and new customer growth.

At <unk>, we continue to perform well with double digit revenue growth in our pharmacies and our strong selling season for our pharmacy offerings are.

Our products are resonating in the market with stronger customer retention and new customer growth.

At this stage, we expect new membership growth in 2026 will be more than offset by expected membership attrition from the United Healthcare business Importantly, our team remains disciplined around pricing transparency and quality outcomes for our customers at a time when the pharmaceutical industry continues to drive cost.

Speaker #2: We will make the investments needed to accelerate the advancement of this distinctive platform that serves the expanse of the health system . We are confident in our plan will ignite top line revenue and operating earnings in line with our long term growth targets at Optumrx , we continue to perform well with double digit revenue growth in our pharmacies and a strong selling season for our pharmacy offerings .

Ever higher.

Today, we offer full rebate pass through arrangements to all of our customers with nearly 85% of them participating we were the first in our industry to announce this arrangement back in the beginning of the year and we expect 95% of our customers will be in these arrangements in 2027 with the remainder in full rebate pass through by 2028.

Speaker #2: Our products are resonating in the market with stronger customer retention and new customer growth . At this stage , we expect new membership growth in 2026 will be more than offset by expected membership attrition from the UnitedHealthCare Business .

Stephen Hemsley: At this stage, we expect new membership growth in 2026 will be more than offset by expected membership attrition from the UnitedHealthcare business. Importantly, our team remains disciplined around pricing, transparency, and quality outcomes for our customers at a time when the pharmaceutical industry continues to drive cost ever higher. Today, we offer full rebate pass-through arrangements to all of our customers, with nearly 85% of them participating. We were the first in our industry to announce this arrangement back in the beginning of the year, and we expect 95% of our customers will be in these arrangements in 2027, with the remainder in full rebate pass-through by 2028. We have increased payments on branded drugs to over 14,000 independent retail pharmacies as part of our commitment to a balanced pricing approach. Thanks for your time today. I'll now turn it over to Wayne DeVite.

And we have increased payments on branded drugs to over 14000 independent retail pharmacies as part of our commitment to a balanced pricing approach.

Speaker #2: Importantly, our team remains disciplined around pricing transparency and quality outcomes for our customers at a time when the pharmaceutical industry continues to drive costs ever higher.

Thanks for your time today, I'll now turn it over to Wayne device.

Good morning, everyone.

Like to begin by expressing my sincere appreciation to Steve.

Speaker #2: Today , we offer full rebate pass through arrangements to all of our customers . With nearly 85% of them participating . We were the first in our industry to announce this arrangement .

Tim Patrick and all of my colleagues at Unitedhealth group for the warm welcome.

It's truly an honor to be part of this team and to contribute to our shared mission.

Speaker #2: Back in the beginning of the year , and we expect 95% of our customers will be in these arrangements in 2027 . With the remainder in full rebate pass through by 2028 .

Today I'd like to cover three important topics.

First I'll provide an overview of our quarterly performance and how it informs our outlook for the rest of the year.

Speaker #2: And we have increased payments on branded drugs to over 14,000 independent retail pharmacies . As part of our commitment to a pricing approach .

I will then discuss our capital and liquidity framework as we look ahead to 2026, particularly in terms of resuming share buybacks and strategic acquisition activities.

Speaker #2: Thanks for your time today . I'll now turn it over to Wayne to Vite .

Finally, I will offer some insights into our expectations for 2026.

Speaker #4: Good morning everyone . I'd like to begin by expressing my sincere appreciation to Steve . Tim , Patrick and all of my colleagues at UnitedHealth Group for the warm welcome .

Wayne DeVite: Good morning, everyone. I'd like to begin by expressing my sincere appreciation to Stephen Hemsley, Tim Noel, Patrick Conway, and all of my colleagues at UnitedHealth Group for the warm welcome. It's truly an honor to be part of this team and to contribute to our shared mission. Today, I'd like to cover three important topics. First, I'll provide an overview of our quarterly performance and how it informs our outlook for the rest of the year. I will then discuss our capital and liquidity framework as we look ahead to 2026, particularly in terms of resuming share buybacks and strategic acquisition activities. Finally, I'll offer some insights into our expectations for 2026. Moving to the quarter, today we reported adjusted EPS of $2.92, which was slightly ahead of our expectations. These results reflect steady execution while we work through our longer-term improvement plans.

Moving to the quarter today.

Today, we reported adjusted earnings per share of $2 92.

Which was slightly ahead of our expectations.

Speaker #4: It's truly an honor to be part of this team and to contribute to our shared mission . Today , I'd like to cover three important topics .

These results reflects steady execution, while we work through our longer term improvement plans.

We balanced our media performance with strategic investments that will support our future growth and natural diversification.

Speaker #4: First , I'll provide an overview of our quarterly performance and how it informs our outlook for the rest of the year . I will then discuss our capital and liquidity framework as we look ahead to 2026 , particularly in terms of resuming share buybacks and strategic acquisition

Some details for the quarter.

We delivered revenues of over 113 billion, reflecting 12% year over year growth.

Driven by domestic membership expansion of over 780000 lives year to date.

Speaker #4: activities . And finally , I'll offer some insights into our expectations for 2026 . Moving to the quarter today , we reported balanced adjusted earnings per share of $2.92 , which was slightly ahead of our expectations .

We ended the third quarter with total domestic membership of more than $50 million.

Our medical care ratio of 89, 9% in the quarter compares to 85, 2% in the same quarter last year with the full year trending towards the lower end of the projections, we offered last quarter.

Speaker #4: These results reflect steady execution while we work through our longer term improvement plans . We balanced immediate performance with strategic investments that will support our future growth and natural diversification .

As Tim stated medical cost trends, while historically high remain consistent with our outlook for 2025 and align with our pricing actions for 2026.

Wayne DeVite: We've balanced immediate performance with strategic investments that will support our future growth and natural diversification. Some details for the quarter: We delivered revenues of over $113 billion, reflecting 12% year-over-year growth, driven by domestic membership expansion of over 780,000 lives year to date. We ended the third quarter with total domestic membership of more than 50 million. Our medical care ratio of 89.9% in the quarter compares to 85.2% in the same quarter last year, with the full year trending toward the lower end of the projections we offered last quarter. As Tim stated, medical cost trends, while historically high, remain consistent with our outlook for 2025 and align with our pricing actions for 2026. The operating cost ratio of 13.5% in the quarter reflects larger investments in technology and people than originally contemplated when guidance was set in Q2.

Speaker #4: Some details for the quarter . We delivered revenues of over 113 billion , reflecting 12% year over year growth , driven by domestic membership expansion of over 780,000 lives year to date .

The operating cost ratio of 13, 5% in the quarter reflects larger investments in technology and people than originally contemplated when guidance was set into Q <unk>.

Speaker #4: We ended the third quarter with total domestic membership of more than 50 million . Our medical care ratio of 89.9% in the quarter compares to 85.2% in the same quarter last year , with the full year trending toward the lower end of the projections .

Specifically, we invested more than $450 million in broad based employee incentives and contributions to the Unitedhealth Foundation.

Both critically important for strengthening our relationships with our workforce and with local communities and the health system at large and.

Speaker #4: We offered last quarter . As Tim stated , medical cost trends while historically high , remain consistent with our outlook for 2025 and align with our pricing actions for 2026 , the operating cost ratio of 13.5% in the quarter reflects larger investments in technology and people than originally contemplated .

And investments were proportionally greater and Optum health and Optum insight.

Finally, our earnings were supported by strong cash flows of two three times net income and an overall increase in days claims payable of $1 seven days sequentially.

Turning to our capital and liquidity framework.

As previously communicated we have paused, our strategic acquisitions and share buybacks, while we dedicate our cash to returning to our long term debt to capital ratio around 40% and interest coverage ratios in line with historic levels.

Speaker #4: When guidance was set in two . Q specifically , we invested more than 450 million in broad based employee incentives and in contributions to the United Health Foundation , both critically important for strengthening our relationships with our workforce and with local communities in the health system at large , and investments were proportionately greater in Optum Health and Optum Insight .

Wayne DeVite: Specifically, we invested more than $450 million in broad-based employee incentives and in contributions to the United Health Foundation, both critically important for strengthening our relationships with our workforce and with local communities in the health system at large. Investments were proportionately greater in Optum Health and Optum Insight. Finally, our earnings were supported by strong cash flows of 2.3 times net income and an overall increase in days claims payable of 1.7 days sequentially. Turning to our capital and liquidity framework. As previously communicated, we have paused our strategic acquisitions and share buyback while we dedicate our cash to returning to a long-term debt-to-capital ratio around 40% and interest coverage ratios in line with historic levels.

In the third quarter, our debt to capital ratio remained stable at 44, 1%, reflecting continued actions to improve cash efficiency offset by the completion of the <unk> transaction late in the third quarter, which represented a net cash disbursement of $3 4 billion.

Speaker #4: Finally , our earnings were supported by strong cash flows of 2.3 times net income and an overall increase in days , claims payable of 1.7 days sequentially .

We expect our debt to capital ratio to trend closer to 40% in the second half of 2026 accordingly, while we have not finalized plans for 2026, we anticipate we may be in a position to reinstate our historical capital deployment practices later in the year.

Speaker #4: Turning to our capital and liquidity framework . As previously communicated , we have paused our strategic acquisitions and share buyback while we dedicate our cash to returning to a long term debt to capital ratio .

Speaker #4: Around 40% and interest coverage ratios in line with historic levels in the third quarter , our debt to capital ratio remained stable at 44.1% , reflecting continued actions to improve cash efficiency , offset by the completion of the transaction late in the third quarter , which represented a net cash disbursement of 3.4 billion .

Finally, we generated operating cash flow from operations of $5 9 billion, we still expect to close this year with $16 billion of operating cash flow or one one times net income.

Wayne DeVite: In the third quarter, our debt-to-capital ratio remains stable at 44.1%, reflecting continued actions to improve cash efficiency, offset by the completion of the Amedisys transaction late in the third quarter, which represented a net cash disbursement of $3.4 billion. We expect our debt-to-capital ratio to trend closer to 40% in the second half of 2026. Accordingly, while we have not finalized plans for 2026, we anticipate we may be in a position to reinstate our historical capital deployment practices later in the year. Finally, we generated operating cash flow from operations of $5.9 billion. We still expect to close this year with $16 billion in operating cash flow or 1.1 times net income. Looking ahead to 2026, as Steve mentioned, we will provide formal guidance with our fourth quarter results in January.

Looking ahead to 2026 as Steve mentioned, we will provide formal guidance with our fourth quarter results in January.

Speaker #4: We expect our debt to capital ratio to trend closer to 40% in the second half of 2026 . Accordingly , while we have not finalized plans for 2026 , we anticipate we may be in a position to reinstate our historical capital deployment practices later in the year .

We are comfortable with current consensus and within that we are making the requisite investments needed to accelerate our returns in 2026 and to position our company for meaningfully stronger growth in 2027 and beyond.

We are optimistic in our ability to execute on our 2026 plans, but there are remaining headwinds we will have to overcome.

Speaker #4: Finally , we generated operating cash flow from operations of 5.9 billion . We still expect to close this year with 16 billion in operating cash flow , or 1.1 times net income .

Items to keep in mind include.

We're entering the final year of <unk> 28, which represents a more than 6 billion headwind to the overall enterprise as you heard from Tim and Patrick we've taken numerous actions around benefit design cost control and member engagement to substantially offset this impact.

Speaker #4: Looking ahead to 2026 , as Steve mentioned , we will provide formal guidance with our fourth quarter results in January . We are comfortable with current consensus and within that , we are making the requisite investments needed to accelerate our returns in 2026 and to position our company for meaningfully stronger growth in 2027 and beyond .

Wayne DeVite: We are comfortable with current consensus, and within that, we are making the requisite investments needed to accelerate our returns in 2026 and to position our company for meaningfully stronger growth in 2027 and beyond. We are optimistic in our ability to execute on our 2026 plans, but there are remaining headwinds we will have to overcome. Items to keep in mind include we're entering the final year of V28, which represents a more than $6 billion headwind to the overall enterprise. As you heard from Tim and Patrick, we've taken numerous actions around benefit design, cost control, and member engagement to substantially offset this impact. Further investment in Optum Health and Optum Insight is needed, and we are accelerating some of those investments as noted in our third quarter results.

Further investment in Optum health in Optum insight as needed and we are accelerating some of those investments as noted in our third quarter results.

We are also accelerating our pace of AI applications to fundamentally advance a vast spectrum of processes and capabilities, we expect will structurally improve our enterprise performance.

Speaker #4: We are optimistic in our ability to execute on our 2026 plans , but there are remaining headwinds we will have to overcome . Items to keep in mind include .

Our effective tax rate is expected to return to a more normalized level in 2026 as compared to 2025 and.

Speaker #4: We are entering the final year of 28 , which represents a more than $6 billion headwind to the overall enterprise . As you heard from Tim and Patrick , we've taken numerous actions around benefit , design , cost control and member engagement to substantially offset this impact .

Finally investment income should continue to move lower as interest rates decline.

From a tailwind perspective.

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.

Speaker #4: Further investment in Optum Health and Optum Insight is needed, and we are accelerating some of those investments. As noted in our third quarter results, we are also accelerating our pace of AI applications to fundamentally advance a vast spectrum of processes and capabilities that we expect will structurally improve our enterprise performance.

We also expect stability at a measured return to growth in our <unk> with aspects of that growth being reinvested in the business, specifically Optum health and Optum insight.

Wayne DeVite: We are also accelerating our pace of AI applications to fundamentally advance a vast spectrum of processes and capabilities we expect will structurally improve our enterprise performance. Our effective tax rate is expected to return to a more normalized level in 2026 as compared to 2025. Investment income should continue to move lower as interest rates decline. From a tailwind perspective, 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. We also expect stability and a measured return to growth in our Optum entities, with aspects of that growth being reinvested in the business, specifically Optum Health and Optum Insight. These investments may slow 2026 growth but should accelerate growth in 2027, more in line with historical expectations.

Investments may slow 2026 growth, but should accelerate growth in 2027 more in line with historical expectations.

Speaker #4: Our effective tax rate is expected to return to a more normalized level in 2026 , as compared to 2025 , and finally , investment income should continue to move lower as interest rates decline from a tailwind perspective , 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 .

We will be paying down debt and identifying opportunities to further reduce our interest expense as a result of the declining rate environment.

Finally, we're taking an aggressive step on affordability initiatives that should improve overall medical trend relative to our pricing.

While we have a number of moving parts to manage for the remainder of this year. We also have concrete plans to execute on all the items. We discuss this morning that will position us for the type of growth you've come to expect from Unitedhealth group.

Speaker #4: We also expect stability and a return to growth in our opportunities, with aspects of that growth being reinvested in the business, specifically Optum Health and Optum Insight.

Thanks for your time this morning, I'll now turn it back to Steve.

Speaker #4: These investments may slow 2026 growth, but should accelerate growth in 2027, more in line with historical expectations. We will be paying down debt and identifying opportunities to further reduce our interest expense.

As I hope you clearly.

<unk> heard clearly.

This team and our 400000 colleagues are focused on delivering on all fronts for the people, we're privileged to serve and for our shareholders.

Wayne DeVite: We will be paying down debt and identifying opportunities to further reduce our interest expense as a result of the declining rate environment. Finally, we're taking an aggressive step on affordability initiatives that should improve overall medical trend relative to our pricing. While we have a number of moving parts to manage for the remainder of this year, we also have concrete plans to execute on all the items we discussed this morning that will position us for the type of growth you've come to expect from UnitedHealth Group. Thanks for your time this morning. I'll now turn it back to Steve.

Speaker #4: As a result of the declining rate environment . And finally , we're taking an aggressive step on affordability initiatives that should improve overall medical trend relative to our pricing .

As I said in the outset, we're being very disciplined this plays out day to day as this management team recognizes the need to manage our costs both in the short term as well as structurally.

Speaker #4: While we have a number of moving parts to manage for the remainder of this year, we also have concrete plans to execute on all the items we discussed this morning that will position us for the type of growth you've come to expect from UnitedHealth Group.

And through another lens throughout the quarter, we have continued to evaluate the company's businesses with fresh perspectives and with continued confidence in our progress and our overall direction.

Speaker #4: Thanks for your time this morning . I'll now turn it back to Steve .

We expect to complete that assessment in the fourth quarter as we position for 2026 in the years ahead.

Speaker #2: Thanks , Wayne . As I hope you clearly you heard clearly this team and our 400,000 colleagues are focused on delivering on all fronts for the people we're privileged to serve and for our shareholders .

Stephen Hemsley: Thanks, Wayne. As I hope you heard clearly, this team and our 400,000 colleagues are focused on delivering on all fronts for the people we're privileged to serve and for our shareholders. As I said in the outset, we're being very disciplined. This plays out day to day as this management team recognizes the need to manage our costs, both in the short term as well as structurally. Through another lens, throughout the quarter, we have continued to evaluate the company's businesses with fresh perspectives and with continued confidence in our progress and our overall direction. We expect to complete that assessment in the fourth quarter as we position for 2026 and the years ahead. A few themes emerge from these efforts. We are dedicating our energies to serving U.S. healthcare needs and will be reducing our footprint in international markets that do not support these needs.

A few themes emerge from these efforts.

We are dedicating our energies to serving U S healthcare needs and we will be reducing our footprint in international markets that do not support these needs.

Speaker #2: As I said in the outset , we're being very disciplined . This plays out day to day as this management team recognizes the need to manage our costs , both in the short term as well as structurally and through another lens throughout the quarter , we have continued to evaluate the company's businesses with fresh perspectives , and with continued confidence in our progress and our overall direction .

We will be finalizing our initiatives for recovery of the remaining outstanding loan balances from the care provider support programs associated with the 2024 change health cyber attack.

For Optum health, we are consolidating locations and completing plans addressing the geographic markets in which we will serve patients all intended to operationally advance and scale, the leading value based clinical care business of Optum health.

Speaker #2: We expect to complete that assessment in the fourth quarter as we position for 2026 and the years ahead . A few themes emerge from these efforts .

And we are realigning, we are realigning optum financial services within our Optum insight services platform.

Speaker #2: We are dedicating our energies to serving U.S. healthcare needs and will be reducing our footprint in international markets that do not support these needs.

While we have not yet finalized these plans. Many of these actions are underway and we believe they will improve both our focus and long term performance.

Speaker #2: We will be finalizing our initiatives for the recovery of the remaining outstanding loan balances from the care provider, support programs associated with the 2024 Change Health Cyber Attack for Optimum Health. We are consolidating locations and completing plans, addressing the geographic markets in which we will serve patients.

Stephen Hemsley: We will be finalizing our initiatives for recovery of the remaining outstanding loan balances from the care provider support programs associated with the 2024 Change Health cyber attack. For Optum Health, we are consolidating location and completing plans addressing the geographic markets in which we will serve patients, all intended to operationally advance and scale the leading value-based clinical care business of Optum Health. We are realigning Optum Financial Services within our Optum Insight Services platform. While we have not yet finalized these plans, many of these actions are underway, and we believe they will improve both our focus and long-term performance. We are in the process of quantifying the accounting, tax, and cash implications of our plans. At this stage, our preliminary work would imply a non-GAAP, substantially non-cash, low single-digit billion-dollar charge. We will provide further details in our fourth quarter call as we conclude these efforts.

We are in the process of quantifying the accounting tax and cash flow implications of our plans.

At this stage, our preliminary work would imply a non-GAAP substantially noncash low single digit billion dollar charge.

Speaker #2: All intended to operationally advance and scale the leading value based clinical care business of Optum Health . And we are realigning . We are realigning Optum Financial Services within our Optum Insight Services platform .

We will provide further details in our fourth quarter call as we conclude these efforts.

Simply put we will end 2025, well positioned for a return to solid growth in 2026.

Celebration in 2027, and a clear focus on our long standing mission and strategy.

Speaker #2: While we have not yet finalized these plans , many of these actions are underway and we believe they will improve both our focus and long term performance .

And an important reason for my confidence in our outlook is the way I see our people embracing a renewed focus on the mission culture and values of our company.

Speaker #2: We are in the process of quantifying the accounting , tax and cash implications of our plans at this stage , our preliminary work would imply a non-GAAP substantially non-cash , low single digit billion dollar charge .

How we go about things in the sensitive area of healthcare is as essential as what we do now we are bringing new energy to that imperative each day.

Now operator, let's open it up for questions.

Speaker #2: We will provide further details in our fourth quarter call as we conclude these efforts . Simply put , we will end 2025 well positioned for a return to solid growth in 2026 .

The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone you may remove yourself from the queue by pressing star too on your Touchtone phone, we ask you to limit yourself to one question. If you ask multiple questions will only be answering the first question.

Stephen Hemsley: Simply put, we will end 2025 well-positioned for a return to solid growth in 2026, acceleration in 2027, and a clear focus on our long-standing mission and strategy. An important reason for my confidence in our outlook is the way I see our people embracing a renewed focus on the mission, culture, and values of our company. How we go about things in the sensitive area of healthcare is as essential as what we do, and we are bringing new energy to that imperative each day. Now, operator, let's open it up for questions.

Speaker #2: Acceleration in 2027 , and a clear focus on our long standing mission and strategy . An important reason for my confidence in our outlook is the way I see our people embracing a renewed focus on the mission , culture and values of our company .

We can respond to everyone in the queue. This morning.

Our first question comes from Josh Raskin with Nephron research.

Speaker #2: How we go about things in the sensitive area of healthcare is as essential as what we do , and we are bringing new energy to that imperative each day .

Hi, Thanks. Good morning, appreciate all that detail. This morning, I was wondering if you could just give us some more updated view or a more specific view on the sub businesses in Optum housing specifically looking to understand how much of the revenue base is coming from capitate premiums from from health plans and within that how much from your biggest cost.

Speaker #2: Now, operator, let's open it up for questions.

Speaker #1: The floor is now open for questions . At this time . If you have a question or comment , please press star one on your touch tone phone .

Operator: The floor is now open for questions. At this time, if you have a question or a comment, please press star one on your touch-tone phone. You may remove yourself from the queue by pressing star two on your touch-tone phone. We ask you to limit yourself to one question. If you ask multiple questions, we will only be answering the first question so we can respond to everyone in the queue this morning. Our first question comes from Josh Rathkin with NEPHRON Research.

Speaker #1: You may remove yourself from the queue by pressing star two on your touch-tone phone. We ask you to limit yourself to one question.

Our UHC and then how much of that remainder is fee for service billings from your employed physicians and then maybe some of the moving parts I heard a little bit of the membership details as you think about stepping into 2026 at least directionally.

Speaker #1: If you ask multiple questions , we will only be answering the first question so we can respond to everyone in the queue . This morning , our first question comes from Josh Raskin with Nephron Research .

Sure.

Why don't we just start with Patrick and then finish with Kristen that's.

Speaker #5: Hi . Thanks . Good morning . Appreciate all that detail this morning . I was wondering if you could just give us a more updated view or a more specific view on the sub businesses in Optumhealth , and specifically looking to understand how much of the revenue base is coming from Capitated premiums from from health plans .

[Analyst 1]: Hi, thanks. Good morning. Appreciate all that detail this morning. I was wondering if you'd just give us a more updated view or a more specific view on the sub-businesses in Optum Health. I'm specifically looking to understand how much of the revenue base is coming from capitated premiums from health plans, and within that, how much from your biggest customer, UnitedHealthcare, and then how much of the remainder is fee-for-service billings from your employed physicians. Maybe some of the moving parts. I heard a little bit of the membership details as you think about stepping into 2026, at least directionally.

That's great. So thanks, Josh for the question high level.

The breakdown on revenue is as we described last quarter, 65% BBC, 15% care delivery fee for service and 20% are payer employer services within BBC.

Speaker #5: And within that , how much from your biggest customer UHC , and then how much of that remainder is fee for service billings from your employed physicians .

Two thirds of our book of business is serving United healthcare the rest a diverse array of payers.

Speaker #5: And then , you know , maybe some of the moving parts ? I heard a little bit of the membership details as you think about stepping into 2026 , at least directionally .

Within.

The growth potential as we close out this year as you heard we plan to close 2025, just under that 3% margin with BBC margins under 1% and then we're taking the actions this year to set us up for 'twenty, six and I'll, let Chris to cover that portion.

Speaker #6: Sure .

[Company Representative]: Sure. Why don't we just start with Patrick and then finish with Krista?

Speaker #2: Why don't we just start with Patrick and then finish with Kristen ? Sounds great . So thanks , Josh , for the question .

Stephen Hemsley: Thanks, Josh, for the question. High level, the breakdown on revenue is, as we described last quarter, 65% VBC, 15% care delivery fee-for-service, and 20% are payer employer services. Within VBC, about two-thirds of our book of business is serving UnitedHealthcare, the rest a diverse array of payers. Within growth potential, as we close out this year, as you heard, we plan to close 2025 just under that 3% margin with VBC margins under 1%. We're taking the actions this year to set us up for 2026, and I'll let Krista cover that portion.

Speaker #2: You know , high level , the breakdown on revenue is , as we described last quarter , 65% BBC , 15% care delivery fee for service and 20% our services within BBC .

Yes. Thanks for the question, Josh So I think as we.

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Pacing into 2026, we remain anchored and committed to the long term potential of this business and the 6% to 8% margin that we outlined in the second quarter and within that the 5% commitment to our value based care agenda.

Speaker #2: It's about two thirds of our book of business is serving UnitedHealthCare . The rest of diverse array of of payers within growth potential .

We continue to work a robust set of actions and opportunities with clear line of sight and frankly, a lot of ambition to the work ahead.

Speaker #2: As we close out this year , as you heard , we plan to close 2025 just under that 3% margin with BBC margins under 1% .

And again just to remain optimistic on our positioning for the long term. Thanks for the question.

Speaker #2: And then we're taking the actions this year to set us up for 26 . And I'll let Chris to cover that portion .

Thank you next question please.

And we'll take our next question from AJ Rice with UBS.

Speaker #7: Yeah , thanks for the question , Josh . So I think as we are , you know , pacing into 2026 , you know , we remain anchored and committed to the long term potential of this business .

Krista Nelson: Yeah, thanks for the question, Josh. As we are pacing into 2026, we remain anchored and committed to the long-term potential of this business. The 6 to 8% margin that we outlined in the second quarter, and within that, the 5% commitment to our value-based care agenda, we continue to work a robust set of actions and opportunities with a clear line of sight and, frankly, a lot of ambition to the work ahead. We just remain optimistic on our positioning for the long term. Thanks for the question.

Okay.

Thanks, Hi, everybody.

Maybe just stick on the optics.

I appreciate the comments on Optum insight and the comment about need for investments and you just sort of comment.

Speaker #7: The 6 to 8% margin that we outlined in the second quarter . And within that , the 5% commitment to our value based care agenda .

Comment a little more deeply on your view of where Optum insight fits competitively at this point where are those investments need to go.

Speaker #7: You know , we continue to work a robust set of actions and opportunities with clear line of sight . And frankly , a lot of ambition to the work ahead .

The timeframe for seeing a reacceleration of growth there.

Speaker #7: And , you know , again , just remain optimistic on our positioning for the long term . Thanks for the question .

Sure I actually think that <unk> competitive position is actually pretty strong we have a really nice base of business and continue to to grow that but I think the potential is much greater so sandeep you want to.

Speaker #2: Thank you . Next question please .

Stephen Hemsley: Thank you. Next question, please.

Speaker #1: And we'll take our next question from A.J. Rice with UBS.

Operator: We will take our next question from AJ Rice with UBS.

Offer some views sure. Thanks, AJ look four weeks into the role I am Super impressed with the talent the domain knowledge, the customer franchise and the mission.

Speaker #8: Thanks . Hi , everybody . Maybe just I'll stick on the Optum theme . I appreciate the comments on Optum Insight and the comment about need for investment .

[Analyst 2]: Thanks. Hi, everybody. Maybe I'll stick on the Optum theme. I appreciate the comments on Optum Insight and the comment about need for investment. Can you comment a little more deeply on your view of where Optum Insight sits competitively at this point, where those investments need to go, and the timeframe for seeing a re-acceleration of growth there?

Speaker #8: Can you just sort of comment a little more deeply on your view of where Optum Insight sits competitively at this point? Where those investments need to go and the time for seeing a re-acceleration of growth?

I'm, particularly excited by the momentum of some of our AI first new products in the portfolio.

And then just last week you must have seen we launched opt in real which is inspired by innovation that United healthcare.

Speaker #8: There ?

This is the first real time platform for claims and reimbursements anywhere in the industry and.

Speaker #6: Sure . I actually think that optum's .

Stephen Hemsley: Sure. I actually think that Optum's competitive position is actually pretty strong. We have a really nice base of business and continue to grow that, but I think the potential is much greater. Sandeep, you want to offer some views?

Speaker #2: Competitive position is actually pretty strong . We have a really nice base of business and continue to to grow that , but I think the potential is is much greater .

And just on early pilots are showing dramatic results in streamlining what I think is one of the most complex pain points for payers and providers I'll.

Speaker #2: So , Sandeep , you want to offer some views .

I'll give you. Another example, we recently launched Optum integrity one.

Speaker #9: Sure . Thanks , A.J. look , four weeks into the role , I am super impressed with the talent , the domain knowledge , the customer franchise and the mission .

Sandeep Dadlani: Sure. Thanks, AJ. Look, four weeks into the role, I am super impressed with the talent, the domain knowledge, the customer franchise, and the mission. I'm particularly excited by the momentum of some of our AI-first new products in the portfolio. I mean, just last week, you must have seen we launched Optum Real, which is inspired by innovation at UnitedHealthcare. This is the first real-time platform for claims and reimbursements anywhere in the industry. Just our early pilots are showing dramatic results in streamlining what I think is one of the most complex pain points for payers and providers. I'll give you another example. We recently launched Optum Integrity One. This is the most advanced AI auto-coding tool in the market, and it's driving demand among health systems and hospitals looking to improve middle revenue cycle automation and performance.

This is the most advanced AI auto coding tool in the market.

And it's driving demand among health systems and hospitals looking to improve mid revenue cycle automation and performance.

Speaker #9: I'm particularly excited by the momentum of some of our AI . First new products in the portfolio . I mean , just last week you must have seen we launched Optum Real , which is inspired by innovation at UnitedHealthCare .

Just some metrics for ambulatory outpatient claim coding this showed 73% productivity or prevailing solutions.

And for hospital inpatient coding at short 23% increase in productivity.

Speaker #9: This is the first real time platform for claims and reimbursements anywhere in the industry . And just our early pilots are showing dramatic results in streamlining what I think is one of the most complex pain points for payers and providers .

A third one is symphony.

This is an AI first clinical analytics platform that has created six wins in the last 90 days itself. This helps providers with their surgical costs and operating room optimization.

Speaker #9: I'll give you another example . We recently launched Optum Integrity one . This is the most advanced AI autocoding tool in the market , and it's driving demand among health systems and hospitals looking to improve middle revenue cycle automation and performance .

Just the average return on investment for any provider system investing in Crimson AI has been 13 is two one.

So look in my first few interactions with our top clients.

Speaker #9: I mean , just some metrics for ambulatory outpatient claims coding . This showed 73% productivity over prevailing solutions . And for hospital inpatient coding , it showed 23% increase in productivity .

Sandeep Dadlani: Just some metrics for ambulatory outpatient claims coding, this showed 73% productivity over prevailing solutions. For hospital inpatient coding, it showed a 23% increase in productivity. A third one is Crimson AI. This is an AI-first clinical analytics platform that has created six wins in the last 90 days itself. This helps providers with their surgical cost and operating room optimization. Just the average return on investment for any provider system investing in Crimson AI has been 13:1. In my first few interactions with our top clients, they've expressed tremendous excitement and anticipation for our new AI-based offerings. They've also provided feedback on where we can do better. It's clear that our traditional services in Optum Insight have to evolve to AI-first services, then to products, and eventually to platforms. We are well on our way with this journey.

Have expressed tremendous excitement and anticipation for our new AI based offerings.

They have also provided feedback on where we can do better.

But it is clear that our traditional services and optum insight have to evolve to AI for services.

Speaker #9: A third one is crimson AI . This is an AI first clinical analytics platform that has created six wins in the last 90 days itself .

<unk> products and eventually the platforms, we are well on our way with this journey.

Speaker #9: This helps providers with their surgical costs and operating room optimization . Just the average return on investment for any provider system . Investing in crimson AI has been 13 is to one , so look , in my first few interactions with our top clients , they've expressed tremendous excitement and anticipation for our new AI based offerings .

Beginning to build powerful AI products like the ones I mentioned, we are rationalizing and modernizing some of the existing legacy products that have great market presence and then finally, the investing in an AI first workforce remember I come from the textural build 10000, AI builders and we are building AI for sales teams Sylvia.

Investing as earlier noted and building growing new products and offerings and I'm incredibly excited about the possibilities.

Speaker #9: They've also provided feedback on where we can do better , but it's clear that our traditional services in Optum Insight have to evolve to AI first services , then to products , and to eventually to platforms .

We wanted to simplify health care with AI and Optum insight as the best company to do it. Thank you for the question.

Thanks Sandeep.

Speaker #9: We are well on our way with this journey . We're beginning to build powerful AI products like the ones I mentioned . We are rationalizing and modernizing some of the existing legacy products that have great market presence .

Next question please.

Our next question comes from Justin Lake with Wolfe Research.

Sandeep Dadlani: We're beginning to build powerful AI products like the ones I mentioned. We are rationalizing and modernizing some of the existing legacy products that have great market presence. Finally, we are investing in an AI-first workforce. Remember, I come from the tech role where we built 10,000 AI builders, and we're building AI-first sales teams. We are investing, as earlier noted, in building, growing new products and offerings. I'm incredibly excited about the possibilities. We want to simplify healthcare with AI, and Optum Insight is the best company to do it. Thank you for the question.

Thanks, Good morning, first let me congratulate and welcome way back to the sector at good value back.

Speaker #9: And then finally , we're investing in AI first workforce . Remember , I come from the tech role where we built 10,000 AI builders and we're building AI for sales teams .

My question here is for Tim.

I wanted to confirm you talked about getting your commercial margins back to the seven 9% target range for 2027, just wanted to make sure I heard that right and then in terms of the FERC baseline for <unk> 45, a credit backing into March it into 3% to 5% range for our commercial team is that the right ballpark.

Speaker #9: So we are investing as earlier noted , in building growing new products and offerings . And I'm incredibly excited about the possibilities we want to simplify healthcare with AI and Optum Insights .

Speaker #9: The best company to do it . Thank you for the question .

Speaker #2: Thanks , Sandeep . Next question please .

Stephen Hemsley: Thanks, Sandeep. Next question, please.

Yes, thanks for the question.

Speaker #1: Our next question comes from Justin Lake with Wolfe Research .

Operator: Our next question comes from Justin Lake with Wolfe Research.

No.

The commercial business as we've talked about for 2026 and as a result of our pricing actions will make meaningful progress as you think about the work being done across the HCA in the other commercial projects products.

Speaker #8: Thanks . Good . morning . First .

[Analyst 2]: Thanks. Good morning. First, let me congratulate and welcome Wayne back to the sector. Good to have you back. My question here is for Tim. I wanted to confirm, you talked about getting your commercial margins back to the 7% to 9% target range for 2027. Just wanted to make sure I heard that right. In terms of the current baseline for 2025, I'm kind of backing into a margin in the 3% to 5% range for commercial, Tim. Is that in the right ballpark? Thanks.

Speaker #10: Let me congratulate and welcome Wayne back to the sector . Good to have you back . My question here is for Tim . Wanted to confirm you talked about getting your commercial margins back to the 7 to 9% target range for 2027 .

To chip away at a return to that seven 9% long term margin.

Speaker #10: Just want to make sure I heard that right . And then in terms of the current baseline for 25 , I'm kind of backing into a margin into 3 to 5% range for commercial .

We view 2026.

A year, where we're probably still 150 basis points below that low end of the margin, but again given how the pricing is being received in the marketplace. Some of the opportunities that we see.

Speaker #10: Tim , is that in the right ballpark ? Thanks .

Speaker #3: Yes . Thanks , Justin , for the question . So the the commercial business , you know , as we've talked about for 2026 and as a result of our pricing actions , we'll make meaningful progress as you think about the work being done across the ACA and the other commercial products to to chip away at our return to that 7.9% long term margin , we view 2026 as a year where we're probably still 150 basis points below that low end .

Tim Noel: Yes. Thanks, Justin, for the question. The commercial business, as we've talked about for 2026 and as a result of our pricing actions, will make meaningful progress as you think about the work being done across the ACA offerings and the other commercial products to chip away at a return to that 7.9% long-term margin. We view 2026 as a year where we're probably still 150 basis points below that low end of the margin. Again, given how the pricing is being received in the marketplace, some of the opportunities that we see around controlling our costs in the future, we still feel as though that longer-term margin range of 7% to 9% is attainable.

Controlling our costs in the future.

We still feel as though that longer term margin range of seven to nine is attainable.

Thank you next question please.

Our next question comes from Stephen Baxter with Wells Fargo.

Yeah, Hi, Thanks, just wanted to ask for some additional color on the membership declines you are expecting in Medicare advantage. In 2020. Thanks can you help us think about the breakout between individual.

Speaker #3: Of the margin . But again , given how the pricing is being received in the marketplace , some of the opportunities that we see around controlling our costs in the future , we still feel as though that longer term margin range of 7 to 9 is attainable .

And group and then at the industry level CMS is expecting enrollment growth would be pretty flat in 2025, I guess first is does the comp.

I agree with that assessment and second how are you thinking about the type of industry growth you might see.

Slide 27 and beyond thank.

Thank you.

I think Bobby Hunter specify this good to.

Speaker #2: Thank you . Next question please .

Great. Thanks, Stephen Good morning, So I'll hit the membership item first.

Stephen Hemsley: Thank you. Next question, please.

Speaker #1: Our next question comes from Stephen Baxter with Wells Fargo .

Operator: Our next question comes from Stephen Baxter with Wells Fargo.

Tim mentioned in the prepared remarks, approximately $1 million membership contraction for 2026 across EMEA.

Speaker #11: Yeah . Hi . Thanks . Just wanted to ask for some additional color on the membership declines you're expecting in Medicare Advantage in 2026 .

[Analyst 3]: Yeah. Hi. Thanks. Just wanted to ask for some additional color on the membership declines you're expecting in Medicare Advantage in 2026. Can you help us think about the breakout between individual duals and group? At the industry level, CMS is expecting enrollment growth to be pretty flat in 2025. I guess first, does the company agree with that assessment? Second, how are you thinking about the type of industry growth you might see as we move into 2027 and beyond? Thank you.

That does include both group and individual yeah, obviously, we've been pretty clear about the fact that were.

Speaker #11: Can you help us think about the breakup between individual duels and groups and then at the industry level , CMS is expecting enrollment growth to be pretty flat in 2025 .

Exiting products impacting about 600000 members. So think about that as kind of your first core element that you build to that.

Speaker #11: I guess . First , does the company agree with that assessment ? And second , how are you thinking about the type of industry growth you might see as we move into 2027 and beyond ?

The balance of the bridge to the $4 million is pretty evenly split between that pressure inside of our group MA business as a result of taking a really disciplined approach to pricing there.

Speaker #11: Thank you .

Speaker #12: I think Bobby Hunter is best for this . Go to it . Yeah . Great . Thanks , Stephen . Good morning . So I'll hit the membership item first .

Stephen Hemsley: I think Bobby Hunter is best for this. Go to it.

Wayne DeVite: Yeah. Great. Thanks, Stephen. Good morning. I'll hit the membership item first. Tim mentioned in the prepared remarks, approximately 1 million membership contractions for 2026 across Medicare Advantage. That does include both group and individual. We've been pretty clear about the fact that we're exiting products impacting about 600,000 members. Think about that as your first core element of how you build to that million. I would say the balance of the bridge to the full million is pretty evenly split between pressure inside of our group Medicare Advantage business as a result of taking a really disciplined approach to pricing there, and some dislocation that will exist in the group customers as a result of some other more aggressive competitor actions. The other 50% of that bridge from the 600,000 to the million represents a pretty even split across our individual Medicare Advantage business.

In some dislocation that will exist in the group customers as a result of some other more aggressive competitor actions and then the other 50% of that bridge.

Speaker #12: You know Tim mentioned in the prepared remarks , you know , approximately a million membership contraction for 2026 across Ma . That does include both group and individual .

From the 600000 to the 1 million, representing a pretty even split across our individual business. Obviously, you're really early in AEP at this point, but that's kind of the way I see it from this distance.

Speaker #12: You know, obviously we've been pretty clear about the fact that we're exiting products, impacting about 600,000 members. So think about that as kind of your first core element of how you build to that million.

Think about growth overall.

Speaker #12: And I would say the balance of the bridge to the the full million is pretty evenly split between pressure inside of our group .

I would expect 2026 to be probably more in line with the general progression and growth that we're seeing in 2025 and Thats largely a result of continued benefit cuts in the marketplace continued planned closures and then some disruption in the broker community related to pretty broad Commission changes.

Speaker #12: My business. As a result of taking a really disciplined approach to pricing, there are some dislocations that will exist in the group of customers as a result of some other more aggressive competitor actions.

I, absolutely believe in the long term growth potential.

Speaker #12: And then the other kind of 50% of that bridge to from the 600,000 to the million representing a pretty even split across our individual Ma business .

<unk> of MAA and I think we can grow above those levels as you step out further.

Right now, although medical trend pressure is increasing the cost of health care and the funding cuts of the program are degrading choice access and value to the consumer and that's a real impact on the $35 million Medicare eligible to rely on the MAA right now to make health care affordable.

Speaker #12: Obviously , really early in AEP at this point . But that's kind of the way I see it from this distance . When you think about growth overall , you know , I would expect 2026 to be probably more in line with the general progression and growth that we're seeing in 2025 .

Wayne DeVite: Obviously, really early in AEP at this point, but that's the way I see it from this distance. When you think about growth overall, I would expect 2026 to be probably more in line with the general progression and growth that we're seeing in 2025. That's largely a result of continued benefit cuts in the marketplace, continued plan closures, and some disruption in the broker community related to pretty broad commission changes. I absolutely believe in the long-term growth potential of Medicare Advantage, and I think we can grow above those levels as you step out further. Ultimately, right now, medical trend pressure is increasing the cost of healthcare, and the funding cuts to the program are degrading choice, access, and value to the consumer. That's a real impact on the 35 million Medicare eligibles who rely on Medicare Advantage right now to make healthcare affordable.

So it's still absolutely believe in the differentiated value proposition of MAA, but cannot underscore the importance of stability in the program as we look to the longer term growth rate and opportunity for MAA. Thanks for the question.

Speaker #12: And that's largely a result of continued benefit cuts in the marketplace , continued plan closures and then some disruption in the broker community related to pretty broad commission changes .

Speaker #12: I absolutely believe in the long term growth potential of Ma , and I think we can grow above those levels as you step out further .

Thanks, Robbie next question please.

Your next question comes from Kevin Fischbeck with Bank of America.

Speaker #12: Ultimately right now , though , medical trend pressure is increasing the cost of health care and the funding cuts to the program are degrading choice , access and value to the consumer .

Great. Thanks.

Wonder if you can talk a little bit more about Optum health.

The the pullback in retrenchment I guess on the refocus on certain types of plans I guess.

Speaker #12: And that's a real impact on the 35 million Medicare eligibles who rely on Ma right now to make health care affordable . So still absolutely believe in the differentiated value proposition of Ma .

A number of years I would've thought that value based care could potentially serve the majority of MA lives. I mean is there is there a tam that you are thinking about like what if you looked at the market today in it because you want to focus on.

Wayne DeVite: I still absolutely believe in the differentiated value proposition of Medicare Advantage, but cannot underscore the importance of stability in the program as we look to the longer-term growth rate and opportunity for Medicare Advantage. Thanks for the question.

Speaker #12: But cannot underscore the importance of stability in the program . As we look to the longer term growth rate and opportunity for Ma .

What percentage of MA really lends itself to a successful value based care model and I guess, how penetrated is that today. Thanks.

Speaker #12: Thanks for the question .

Speaker #2: Thanks , Bobby . Next question please .

Stephen Hemsley: Thanks, Bobby. Next question, please.

Speaker #13: Our next question comes from Kevin Fischbeck .

Operator: Our next question comes from Kevin Fischbeck with Bank of America.

Yes, Chris the respond to this but I think we remain very positive and actually think may should move more to value based care and those themes just picking up up exactly what Bobby said, So Christa, maybe you want to talk a little bit about the future of value based care, yes, absolutely Kevin. Thanks, So much for the question so.

Speaker #1: With Bank of America .

Speaker #14: Great . Thanks . I was wondering if you could talk a little bit more about Optum Health . The the pullback in retrenchment , I guess in the refocus on certain types of plans .

[Analyst 3]: Great. Thanks. I was wondering if you could talk a little bit more about Optum Health. The pullback and retrenchment, I guess, and the refocus on certain types of plans. If we went back a number of years, we would have thought that value-based care could potentially serve the majority of Medicare Advantage lives. Is there a TAM that you're thinking about? If you looked at the market today and the markets you want to focus on, what % of Medicare Advantage really lends itself to a successful value-based care model, and how penetrated is that today? Thanks.

Speaker #14: I guess if we went back a number of years , you would have thought that value based care could potentially serve the majority of Ma lives .

As we mentioned in our opening remarks, we are deeply committed to value based care and.

Speaker #14: I mean , is there is there a tan that you're thinking about ? Like , what if you looked at the market and the markets you want to focus on what percentage of Ma really lends itself to a successful value based care model ?

Research continues to validate the impact that it can have no fee for service rewards volume.

We know that value based care aligns incentives and when you look across Optum health, we've got an incredible set of assets that really enable an integrated delivery system to create value in the markets that we're focused on and so I just think about that potential.

Speaker #14: And I guess how penetrated is that today ? Thanks .

Speaker #15: Yeah. Hi, Krista.

Stephen Hemsley: Yeah. I'll have Krista respond to this, but I think we remain very positive and actually think Medicare Advantage should move more to value-based care and those themes, just picking up off exactly what Bobby said. Krista, maybe you want to talk a little bit about the future of value-based care?

Speaker #2: Respond to .

Speaker #15: This , but I think we remain very positive and actually .

Speaker #2: Think Ma should move more to value based care . And those themes just picking up exactly what Bobby said . So , Krista , maybe you want to talk a little bit about the future of value based care .

It really is limitless I think what youre seeing from us.

Our focus on operating discipline and.

Speaker #7: Yeah , absolutely . Kevin , thanks so much for the question . So , you know , as we mentioned in our opening remarks , we we are deeply committed to value based care and , you know , research continues to validate the impact that it can have .

Really kind of getting back to some of our core so that we are able to expand and grow in the future and we're really deepening our presence in markets.

Krista Nelson: Yeah, absolutely. Kevin, thanks so much for the question. As we mentioned in our opening remarks, we are deeply committed to value-based care, and research continues to validate the impact that it can have. We know fee-for-service rewards volume. We know that value-based care aligns incentives. When you look across Optum Health, we've got an incredible set of assets that really enable an integrated delivery system to create value in the markets that we are focused in. As I just think about the potential, it really is limitless. I think what you're seeing from us is a focus, an operating discipline, and really kind of getting back to some of our core so that we are able to expand and grow in the future. We're really deepening our presence in markets.

Focus on the appropriate network on the appropriate providers on the appropriate risk.

Speaker #7: We know fee for service rewards volume . You know , we know that value based care aligns incentives . And when you look across Optum Health , we've got an incredible set of assets that really enable an integrated delivery system to create value in the markets that we are focused in .

<unk> portfolio. So that we are positioned for long term success inside of diabetes care.

Which implies you have to have it aligned to the right products you have to have it aligned to the right.

Processes and disciplines and that alignment is what really what we're returning to good.

Speaker #7: And so , you know , I just think about the the potential . It's , you know , it's it really is limitless .

Good question next please.

Speaker #7: I think what you're seeing from us is a focus . An operating discipline . And really kind of getting back to some of our core so that we are able to expand and grow in the future .

Yes.

Our next question comes from George Hill with Deutsche Bank.

Good morning, and thanks for taking the question, but we saw a pretty significant step up in what I would call discretionary expenses in the quarter compared to Q2, you talked a lot about the need for investment in a lot of the business lines. I guess, we should think about those numbers can you talk about that can you can you quantify the step up in investments that were incurred in Q3 and how much of those.

Speaker #7: And we're really deepening our presence in markets , you know , we're focused on the appropriate network , on the appropriate providers and the appropriate risk footprint portfolio so that we are positioned for long term , long term success inside value based care .

Krista Nelson: We're focused on the appropriate network, on the appropriate providers, on the appropriate risk footprint portfolio so that we are positioned for long-term success inside value-based care.

Should we think of as run rate investments versus onetime investments, where we will see leverage going forward.

Speaker #2: Which implies you have to have it aligned to the right products . You have to have it aligned to the right processes and disciplines .

Stephen Hemsley: Which implies you have to have it aligned to the right products. You have to have it aligned to the right processes and disciplines. That alignment is really what we're returning to. Good question. Next, please.

Sure.

Speaker #2: And that alignment is really what we're returning to . So good question . Next please .

Just take it yes, thanks, George good morning.

I'd say of the 450 plus that we discussed about a third of that is our commitment to our foundation, which had not been funded at the levels that it should have been in the past and clearly puts us on a runway for multiple years of activities around the foundation. So view it as is not necessarily run rate into next year, but nonetheless, something that we believe.

Speaker #1: Our next question comes from George Hill with Deutsche Bank .

Operator: Our next question comes from George Hill with Deutsche Bank.

Speaker #16: Yeah . Good morning and thanks for taking the question . We saw a pretty significant step up in what I would call discretionary expenses in the quarter compared to Q2 .

[Analyst 4]: Yeah. Good morning, and thanks for taking the question. We saw a pretty significant step up in what I would call discretionary expenses in the quarter compared to Q2. You talked a lot about the need for investment in a lot of the business lines. I guess as you think about those numbers, can you talk about, can you quantify the step up in investments that were incurred in Q3 and how much of those should we think of as run rate investments versus one-time investments for we'll see leverage going forward?

Speaker #16: And you talked a lot about the need for investment in a lot of the business lines . I guess as you think about those numbers , can you talk about can you can you quantify the step up in investments that were incurred in Q3 and how much of those should we think of as run rate investments versus one time investments where we'll see leverage going forward ?

As part of our on core and core and we will continue to do it in the outer years of the Delta of that then is all investments in our people you heard sandeep talk a bit about optum insight and that cultivated with the number of resources, we have there and aligning incentives around the execution that we expect so.

Speaker #4: Sure .

Stephen Hemsley: Sure. Wayne, just take it.

Speaker #2: Wayne , just take it .

Speaker #4: Yeah . Hey . Thanks , George . Good morning . I would say of the 450 plus that we discussed , about a third of that is a commitment to our foundation , which had not been funded at the levels that it should have been in the past and clearly puts us on a runway for multiple years of activities around the foundation .

Wayne DeVite: Yeah. Hey, thanks, George. Good morning. I would say of the $450 million plus that we discussed, about a third of that is a commitment to our foundation, which had not been funded at the levels that it should have been in the past and clearly puts us on a runway for multiple years of activities around the foundation. View it as not necessarily run rate in the next year, but nonetheless, something that we believe is part of our on-court and core, and we'll continue to do it in the outer years. The delta of that then is all investments in our people. You heard Sandeep talk a bit about Optum Insight and that cultivated with the number of resources we have there and aligning incentives around the execution that we expect.

I would view much of that is being recurring in nature part of our core business and the investments will continue to make in the expansion that we see both in Optum health and NII specifically.

I appreciate it. Thank you next question please.

Speaker #4: So view it as , as not necessarily run rate into next year , but nonetheless something that we believe is part of our encore .

Our next question comes from Lisa Gill with J P. Morgan.

Alright, thanks, very much good morning, I, just had a question around utilization and how to think about it here in the back half of the year.

Speaker #4: Encore . And we'll continue to do it in the outer years . The delta of that , then , is all investments in our people .

Clearly this quarter came in a little bit better than what we were expecting but.

Speaker #4: You heard Sandeep talk a bit about Optum Insight and that cultivated with the the number of resources we have there and aligning incentives around the execution that we expect .

We're looking at what's happening with the exchanges looking at the step up in part D. So can you maybe just talk about your expectation going into the fourth quarter and specific to part D are you expecting a big step up as we think about the fourth quarter.

Speaker #4: So I would view much of that as being recurring in nature . Part of our core business and the investments will continue to make in the expansion that we see both in Optum Health and in AI specifically .

Wayne DeVite: I would view much of that as being recurring in nature, part of our core business, and the investments we'll continue to make in the expansion that we see both in Optum Health and in AI specifically.

Tim you want to take this yes.

Yes, Thanks, Lisa for the question so as I think about utilization really tracking in line with the expectations that we called out in last quarter's call really across all of the product lines.

Speaker #2: Appreciate it . Thank you . Next question please .

Stephen Hemsley: Appreciate it.

Wayne DeVite: Thank you. Next question, please.

Speaker #1: Our next question comes from Lisa Gill with J.P. Morgan .

Operator: Our next question comes from Lisa Gill with JP Morgan.

Speaker #17: Thanks very much . Good morning . I just had a question around utilization and how to think about it here in the back half of the year .

Krista Nelson: Thanks very much. Good morning. I just had a question around utilization and how to think about it here in the back half of the year. Clearly, this quarter came in a little bit better than what we were expecting, but you know, we're looking at what's happening with the exchanges, looking at the step up in Part D. Can you maybe just talk about your expectation going into the fourth quarter? Specific to Part D, are you expecting a big step up as we think about the fourth quarter?

The general commercial business, including the ACA as well as Medicare and Medicaid and then also on.

Speaker #17: Clearly this quarter came in a little bit better than what we were expecting . But you know , we're looking at what's happening with the exchanges , looking at the step up in part D .

On the part D portion of the business also tracking in line with expectations.

Speaker #17: So can you maybe just talk about your expectation going into the fourth quarter . And specific to part D ? Are you expecting a big step up as we think about the fourth quarter ?

Clearly there is a.

Quite a bit of seasonality thats always at play in the health insurance business. I think you can think of normal seasonality first half to second half as 60% in the first half in terms of earnings contribution 40% in the second half this year given some of the trends that we've seen.

Speaker #2: Tim , you want to take this .

Stephen Hemsley: Tim, you want to take this?

Speaker #3: Yeah . Thanks , Lisa for the question . So I think about , you know , utilization really tracking in line with the expectations that we called out in last quarter's call .

Tim Noel: Yeah. Thanks, Lisa, for the question. As I think about utilization, really tracking in line with the expectations that we called out in last quarter's call, really across all of the product lines, the general commercial business, including the ACA offerings, as well as Medicare and Medicaid. Also, on the Part D portion of the business, also tracking in line with expectations. Clearly, there is quite a bit of seasonality that's always at play in the health insurance business. I think you can think of normal seasonality, first half to second half as 60% in the first half in terms of earnings contribution, 40% in the second half. This year, given some of the trends that we've seen, a little bit more of a bias towards earnings in the first half of the year versus the second half of the year.

A little bit more of a <unk>.

Speaker #3: Really across all of the product lines , the general commercial business , including the ACA , as well as Medicare and Medicaid , and also on on the part D portion of the business .

<unk> towards earnings.

The first half of the year versus the second half of the year, but really kind of trends tracking with how we expected them to track consistent with what we guided in the second quarter.

Speaker #3: Also tracking in line with expectations . Clearly , there is , you know , a quite a bit of seasonality that's always at play in the health insurance business .

And the seasonality really just kind of a byproduct of of the business and also some of the additional spend that we have on things like a seasonal ramp in AEP with respect to Medicare.

Speaker #3: I think you can think of normal seasonality , you know , first half to second half as 60% in the first half in terms of earnings contribution , 40% in the second half .

Thanks, Tim.

Next please.

Our next.

<unk> comes from Andrew Mok with Barclays.

Speaker #3: You know , this year , given some of the trends that we've seen a little bit more of a bias towards earnings in the first half of the year versus the second half of the year , but really kind of trends tracking with how we expected them to track , consistent with what we guided in the second quarter .

Hi, Good morning, I wanted to follow up on the Medicare part D drug benefit for next year. It looks like the benefit for tier three branded drugs changed from a copay coinsurance across most of your MA PD and Standalone part D. Plans can you elaborate on your experience with the co pay structure in 2025, and what drove that decision to.

Tim Noel: Really, trends tracking with how we expected them to track, consistent with what we guided in the second quarter. The seasonality is really just kind of a byproduct of the business and also some of the additional spend that we have on things like a seasonal ramp in AEP with respect to Medicare.

Speaker #3: And the seasonality really just kind of a byproduct of of the business . And also some of the additional spend that we have on things like a seasonal ramp and AEP , with respect to Medicare .

Change the benefit structure in 2026.

Yes.

Yeah, Hey, good morning, Andrew Thanks for the question so yes.

I would tell you just kind of big picture, we take a multiyear metered approach to our benefit planning and that includes as you can appreciate managing and balancing many different variables and thats, particularly important given the dynamics around the 28 and the phased approach there.

Speaker #2: Thanks , Tim . Next , please .

Stephen Hemsley: Thanks, Tim. Next, please.

Speaker #1: Our next question comes from Andrew Mock with Barclays .

Operator: Our next question comes from Andrew Witty with Barclays.

Speaker #18: Hi . Good morning . I wanted to follow up on the Medicare Part D drug benefit for next year . It looks like the benefit for tier three branded drugs changed from a copay to coinsurance across most of your mapd and standalone part D plans .

[Analyst 3]: Hi, good morning. I wanted to follow up on the Medicare Part D drug benefit for next year. It looks like the benefit for Tier 3 branded drugs changed from a copay to co-insurance across most of your MAPD and standalone Part D plans. Can you elaborate on your experience with the copay structure in 2025 and what drove that decision to change the benefit structure in 2026? Thanks.

The other element, perhaps just to kind of call out as you think about how we decided the.

The modifications to make to the benefit design for part D. In particular for 26 with some uncertainty around the demo program and how that would continue to persist or not into 2026. So we took what we felt was an appropriately cautious approach they're pulling all the levers.

Speaker #18: Can you elaborate on your experience with the copay structure in 2025 ? And what drove that decision to change the benefit structure in 2026 ?

Speaker #18: Thanks .

Speaker #19: Okay , Bobby ? Yep .

Stephen Hemsley: Thanks, Bobby. Yep.

Speaker #12: Yeah . Hey . Good morning Andrew . Thanks for the question . So , you know , I would say just kind of big picture .

Wayne DeVite: Yeah. Hey, good morning, Andrew. Thanks for the question. I would say just kind of big picture, we take a multi-year metered approach to our benefit planning. That includes, as you can appreciate, managing and balancing many different variables. That's particularly important given the dynamics around V28 and the phased approach there. The other element perhaps just to kind of call out as you think about how we decided the modifications to make to the benefit design for Part D in particular for 2026 was some uncertainty around the demo program and how that would continue to persist or not into 2026. We took what we felt was an appropriately kind of cautious approach there, pulling all the levers available to us to ensure that we would be well positioned on the overall benefit design regardless of how the demo came into 2026.

Available to us to ensure that we would be well positioned on the overall benefit design, regardless of how the demo came into 2026. So as I look now with kind of where we sit from a benefit design standpoint with the co insurance, we have on tier three the deductibles that we have kind of broadly across EMEA PD and PDP.

Speaker #12: You know , we take a multi-year metered approach to our benefit planning that includes , you know , as you can appreciate managing and balancing many different variables .

Speaker #12: And that's particularly important given the dynamics around Vps28 and the phased approach . There . You know , the other element , perhaps just to kind of call out , as you think about how we decided , you know , the the modifications to make to the benefit design for part D , in particular for 2026 was some uncertainty around the demo program and how that would continue to persist or not , into 2026 .

I feel pretty aligned to industry there Ed.

Expect us to have continued.

Continued good performance as we step then into 2026 and as it relates to 'twenty five really the Mvpds side no concerns around selection mix or outlook given the prevalence of deductibles that we put on our <unk> offerings.

Speaker #12: So we took what we felt was an appropriately kind of cautious approach there , pulling all the levers available to us to ensure that we would be well positioned on the overall benefit design , regardless of how the demo came into 2026 .

PDP really kind of no material contributor or a risk to rest of your outlook on that one either so overall feel pretty good about how we're stepping into 'twenty six on PDP.

Speaker #12: So as I look now at kind of where we sit from a design standpoint with the coinsurance , we have on tier three , the deductibles that we have kind of broadly across Mapd and PDP .

Wayne DeVite: As I look now at kind of where we sit from a benefit design standpoint with the co-insurance we have on Tier 3, the deductibles that we have kind of broadly across MAPD and PDP, I feel pretty aligned to industry there. I would expect us to have continued good performance as we step then into 2026. As related to 2025, really, on the MAPD side, no concerns around selection mix or outlook given the prevalence of deductibles that we put on our MAPD offerings. On PDP, really kind of no material contributor or risk to the rest of your outlook on that one either. Overall, I feel pretty good about how we're stepping into 2026 on PDP.

Okay.

Great. Thank you.

Next question please.

Our next question comes from Ann Hynes with Mizuho Securities.

Speaker #12: You know , I feel pretty aligned to industry . There . And I , you know , would expect us to have , you know , continued , you know , good performance as we step then into 2026 and as it relates to 25 , really , you know , on the Mapd side , no concerns around selection mix or outlook given the prevalence of deductibles that we put on our mapd offerings and on really kind of no material contributor or risk to the rest of your outlook on that one either .

Great. Thanks. My question is focused on Medicaid in the last call I believe.

Margin should be in the negative one to negative one 5% range is that still a good bogey.

And just like looking with a one big beautiful Bell is there anything that would prevent like a path to Medicaid margin recovery.

And 2007 and 2028.

Speaker #12: So overall , feel pretty good about how we're stepping into 26 on PDP .

Mike do you want to take that.

Yes, Dan Thanks for the question and good morning, as Tim indicated our view for Medicaid has not changed from last quarter, we expect breakeven in 2026.

Speaker #18: Great . Thank you .

Stephen Hemsley: Great. Thank you. Next question, please.

Speaker #2: Next question please .

Speaker #1: Our next question comes from Ann Hynes with Mizuho Securities .

Operator: Our next question comes from Anne Heinz with Mizuho Securities.

In 2025, as we think about 2026, we expect some margin degradation.

Speaker #20: Great . Thanks . My question is focused on Medicaid . And the last call , I believe you said margins should be in the negative 1 to -1.5% .

[Analyst 3]: Great, thanks. My question is focused on Medicaid. At the last call, I believe you said margins should be in the negative 1% to negative 1.5% range. Is that still a good bogey? Just looking with one big beautiful bill, is there anything that would prevent a path to Medicaid margin recovery in 2027 and 2028? Thanks.

Due to the continued dislocation of premium funding and what we're seeing in terms of elevated medical cost trends, but we do see 2026 as the trough for that performance.

Speaker #20: Range . Is that still a good bogey and just like looking with a one big beautiful bill , is there anything that would prevent like a path to Medicaid margin recovery in 2007 and 2028 ?

But the trends are driven as the industry has by our specialty pharmacy behavioral health and also as we look at home health services.

Speaker #20: Thanks .

We think over time, the one big beautiful build there'll be some transformation and work as we collaborate with states, but we see over time. It was about an 18 to 24 month period, we'll be able to return to a rate of margins of around 2%. Thanks very much for the question.

Speaker #2: Mike , do you want to take that ?

Stephen Hemsley: Mike, you want to take that?

Speaker #21: Yes , Ann , thanks for the question and good morning . As Tim indicated , our view for Medicaid has not changed from last quarter .

[Analyst 2]: Yes, Anne. Thanks for the question and good morning. As Tim indicated, our view for Medicaid has not changed from last quarter. We expect break even in 2025. As we think about 2026, we expect some margin degradation due to the continued dislocation of premium funding and what we're seeing in terms of elevated medical cost trends. We do see 2026 as the trough for that performance. Our elevated trends are driven, as the industry has, by specialty pharmacy, behavioral health, and also as we look at home health services. We think over time, the one big beautiful bill, there'll be some transformation and work as we collaborate with states. We see over time, about an 18 to 24-month period, we'll be able to return to rated margins of around 2%. Thanks very much for the question.

Speaker #21: We expect break even in 2026 , as we are in 2025 , as we think about 2026 , we expect some margin degradation due to the continued dislocation of premium funding and what we're seeing in terms of elevated medical cost trends .

Thanks, Mike next question please.

Our next question comes from Lance Wilkes with Bernstein.

Speaker #21: But we do see 2026 as the trough for that performance . Elevated trends are driven as the industry has by specialty pharmacy , behavioral health , and also as we look at home health services , we think over time , the one big , beautiful bill , there will be some transformation and work as we collaborate with states , but we see over time about an 18 to 24 month period .

Great. Thanks, a lot could you talk a little bit about the employer market.

Specifically with the medical cost trends Youre seeing this year and next and given.

The pressures on employers there is some of the strategies. They are looking at for the 26 and looking out to 'twenty seven on the selling seasons in particular and the interest in adoption of value based care or they are using more <unk> things like that thanks.

Speaker #21: We'll be able to return to rated margins of around 2% . Thanks very much for the question .

Dan.

Yes, Thanks Lance for the question.

Speaker #2: Thanks , Mike . Next question please .

Stephen Hemsley: Thanks, Mike. Next question, please.

Trends for 2025, and our outlook for 2026 remain in line with what we shared in the guidance last quarter trends or approximately 11% and that is how we have priced into 2026 and I'll just share that with 50% of our January <unk>.

Speaker #1: Our next question comes from Lance Wilkes with Bernstein .

Operator: Our next question comes from Lance Wilkes with Bernstein.

Speaker #22: Great . Thanks a lot . Could you talk a little bit about the employer market and specifically what's the medical cost trends you're seeing this year and next ?

[Analyst 4]: Great. Thanks a lot. Could you talk a little bit about the employer market and specifically, what's the medical cost trends you're seeing this year and next? Given the pressures on employers, what are some of the strategies they're looking at for 2026 and looking out to 2027 on the selling seasons in particular? Any interest in adoption of value-based care? Are they using more surest? Things like that. Thanks.

Speaker #22: And given the the pressures on employers , what are some of the strategies they're looking at for the 26 and looking out to 27 on the selling seasons in particular , any interest in adoption of value based care ?

<unk> business resolved at this point.

Encouraged by both the yield on persistency and rate too.

To deliver the margin expansion that Tim spoke about.

Speaker #22: Are they using more surest things like that ? Thanks .

In light of that trend of approximately 11% Youre right health care affordability is top of mind for all employers and we hear that this selling and renewal season, as we always do but even a little bit louder, given the trends and the pricing associated with it employers are evaluating a host of <unk>.

Speaker #19: Dan .

Stephen Hemsley: Dan.

Speaker #3: Yeah .

Speaker #2: Thanks , Lance , for the question . Trends for .

[Analyst 1]: Yeah, thanks, Lance, for the question. Trends for 2025 and our outlook for 2026 remain in line with what we shared in the guidance last quarter. Trends are approximately 11%, and that is how we have priced into 2026. I'll just share that with 50% of our January insured business resolved at this point, encouraged by both the yield on persistency and rate to deliver the margin expansion that Tim spoke about in light of that trend of approximately 11%. You're right. Healthcare affordability is top of mind for all employers, and we hear that this selling and renewal season, as we always do, but even a little bit louder given the trends and the pricing associated with it. Employers are evaluating a host of considerations you referenced, Surest, and Surest continues to be a leading product for us, continuing to capture share.

Speaker #23: 2025 and our outlook for 2026 remain in line with what we shared in the guidance last quarter . Trends are approximately 11% , and that is how we have priced into 2026 .

Considerations, you referenced surest insurers to continues to be a.

Speaker #23: And I'll just share that with 50% of our January insured business resolved at this point , encouraged by both the yield on persistency and rate to deliver the margin expansion that Tim spoke about in light of that trend of approximately 11% , you're right .

A leading product for us continuing to capture share and that has.

Has continued to grow and has a robust pipeline already as we look toward the jumbo selling season of 2027 I might highlight some additional things that employers are looking at is well integrated.

Speaker #23: Health affordability is top of mind for all employers , and we hear that this selling and renewal season , as we always do .

Integrated advanced advocacy solutions that we sell on our product portfolio continue to capture employer attention as they help us bring together.

Speaker #23: But even a little bit louder given the trends and the pricing associated with it . Employers are evaluating a host of considerations . You referenced surest and surest continues to be leading product for us , continuing to capture , share and that has has continued to grow and has a robust pipeline already .

More synergistic approaches to care that includes value based care as you referenced tighter coordination between medical benefits and Rx benefits, which employers are continuing to do on an increasing basis as we see more and more employers moving to combining medical and Rx benefits.

[Analyst 1]: That has continued to grow and has a robust pipeline already as we look toward the jumbo selling season of 2027. I might highlight some additional things that employers are looking at as well. Integrated advanced advocacy solutions that we sell in our product portfolio continue to capture employer attention as they help us bring together more synergistic approaches to care. That includes value-based care, as you referenced, tighter coordination between medical benefits and Rx benefits, which employers are continuing to do on an increasing basis as we see more and more employers moving to combining medical and Rx benefits. Satisfied very much so with how we're advancing in that way with Optum Rx. Those are a couple of highlights that I would offer that are on top of mind for employers, certainly for 2026 and already as we look forward into 2027. Thanks for the question, Lance.

Satisfied very much so with how we're advancing in that way with Optum Rx. So those are a couple of highlights that I would offer that are on top of mind for employers certainly for 2026 and already as we look forward into 2027. Thanks for the question Lance Thanks, Dan with Great response.

Speaker #23: As we look toward the jumbo selling season of 2027 , I might highlight some additional things that employers are looking at as well integrated , advanced advocacy solutions that we sell in our product portfolio continue to capture employer attention as they help us bring together more synergistic approaches to care .

The next question please.

Our next question comes from Scott Fidel with Goldman Sachs.

Speaker #23: That includes value based care . As you referenced , tighter coordination between medical benefits and RX benefits , which employers are continuing to do on an increasing basis .

Hi, Thanks, good morning.

Appreciate the update on the.

Capital deployment timing returning to the normal plan.

Speaker #23: As we see more and more employers moving to combining medical and benefits and satisfied very much so with how we're advancing in that way , with Optumrx .

Can you also just update us on sort of the dividend and what your view is on the dividend and that looking forward and then curious just around I know that there is going to need to be possibly some portfolio rationalization occurring at.

Speaker #23: So those are a couple of highlights that I would offer that are on top of mind for employers . Certainly for 2026 . And already as we look forward into 2027 .

At Optum health and other businesses as you.

Speaker #23: Thanks for the question , Lance .

Pursue the the new approach is there a way that you can sort of frame that for us in terms of I don't know whether its sort of revenue or just just more philosophically, how youre thinking about the asset base.

Speaker #19: Thanks , Dan .

Stephen Hemsley: Thanks, Dan. That's a great response. Scott, the next question, please.

Speaker #2: A great response . Scott . Next question please .

Speaker #1: Our next question comes from Scott Fidel with Goldman Sachs .

Operator: Our next question comes from Scott Fidel with Goldman Sachs.

Speaker #24: Hi . Thanks . Good morning . Appreciate the update on the the capital deployment timing to returning to the the normal plan . Can you also just update us on sort the dividend and what your your view is on the dividend and that looking forward and then curious just around .

And Oh, H and maybe more broadly around.

Wayne DeVite: Hi, thanks. Good morning. Appreciate the update on the capital deployment timing returning to the normal plan. Can you also just update us on the dividend and what your view is on the dividend and that looking forward? Curious just around, I know that there's going to need to be possibly some portfolio rationalizations occurring in Optum Health and other businesses as you pursue the new approach. Is there a way that you can sort of frame that for us in terms of, I don't know whether it's sort of revenue or just more philosophically, you know, how you're thinking about the asset base and Optum Health and maybe more broadly around where and around, you know, potential rationalizations that could occur? Thanks.

We're at around potential rationalizations that could occur thanks.

Sure. So the dividend will start with Wayne and then ill start with the.

Optimism give it to Chris to enter Patrick So Wayne Thanks, Steve and good morning, Scott There are no changes in our historical dividend practices, nor do we expect those to change going forward, we will maintain the dividend as we've done the next prioritization as we're paying down debt will then revert back to the buyback program and then our strategic.

Speaker #24: I know that there's going to need to be possibly some portfolio rationalizations occurring in Optum Health and other businesses as you pursue the the new approach , is there a way that you can sort of frame that for us in terms of , I don't know whether it's sort of revenue or just just more philosophically , you know , how you're thinking about the asset base and , and , and maybe more broadly around where and around , you know , potential rationalizations that could occur .

Physicians, so view it as a no changes and then hopefully back into our normal capital deployment activities back half of next year.

And then just broadly.

Related to Optum health.

Speaker #24: Thanks .

People understand.

Speaker #19: Sure . The dividend will start with Wayne , and then I'll start with the Optum . And give it to Krista and to Patrick .

We are very much committed to this we're just reshaping it back to the way we had originally.

Stephen Hemsley: Sure. At the dividend, we'll start with Wayne, and then I'll start with Optum and give it to Krista and to Patrick. Wayne.

Conceived it and believe that it has the most impact and value and we really just taken the right steps to bring that back into form so that we can really move and grow and advance it.

Speaker #19: So Wayne .

Speaker #4: Thanks , Steve . And good morning Scott . There are no changes in our historical dividend practices , nor do we expect those to change going forward .

Wayne DeVite: Thanks. Steven, good morning, Scott. There are no changes in our historical dividend practices, nor do we expect those to change going forward. We will maintain the dividend as we've done. The next prioritization as we're paying down debt will then revert back to the buyback program and then our strategic acquisitions. View it as no changes and then hopefully back into our normal capital deployment activities back half of next year.

Speaker #4: We will maintain the dividend as we've done; the next prioritization, as we're paying down debt, will then revert back to the buyback program.

In the construct of that disciplined model, we had going forward. So Chris do you want to talk a little bit about that yes, and just add to that thanks. Thanks for the question. So yes, so Scott.

Speaker #4: And then our strategic acquisitions . So view it as a no changes . And then hopefully back into our normal capital deployment activities .

As Steve mentioned, we are really kind of taking a look at the whole like integrated delivery system. We have a combination of value based care assets. Some assets that are focused more on fee for service, but truly enable that value based care agenda, and it's really important to ensure that kind of integrated model can deliver the best outcomes and so as we're thinking about that.

Speaker #4: Back half of next year .

Speaker #19: And then just broadly , you know related to Optum health helping people understand what we are very much committed to this . We are just reshaping it back to the way we originally conceived it .

Stephen Hemsley: Broadly, related to Optum Health, helping people understand, we are very much committed to this. We are just reshaping it back to the way we had originally conceived it and believe that it has the most impact and value. We are really just taking the right steps to bring that back into form so that we can really move, grow, and advance it in the construct of that disciplined model we had going forward. Krista, you want to talk a little bit about that?

Speaker #19: And believe that it has the most impact and value .

Valeant rationalization, taking into account a combination of things like where we have the right clinical quality, where we have the best operating cost performance, where we have the right engagement and where that model can really be brought to life for both value based and those.

Speaker #2: And we're really just taking the right steps to bring that back into form so that we can really move and grow and advance it in the construct of that disciplined model we had going forward .

Speaker #2: So , Christy , you want to talk a little bit about that .

Speaker #7: Yeah . I can just add to that . Thanks . Thanks for the question . So yeah , so Scott , you know , as Steve mentioned , we are really kind of taking a look at the whole like integrated delivery system .

Krista Nelson: Yeah, I can just add to that. Thanks. Thanks for the question. So, Scott, as Stephen Hemsley mentioned, we are really kind of taking a look at the whole integrated delivery system. We have a combination of value-based care assets, some assets that are focused more on fee-for-service, but truly enable that value-based care agenda. It's really important to ensure that kind of integrated model can deliver the best outcomes. As we're thinking about the portfolio rationalization, we're taking into account a combination of things like where we have the right clinical quality, where we have the best operating cost performance, where we have the right engagement, and where that model can really be brought to life for both value-based and those kind of fee-for-service service lines as well. I think those are the ways in which we're kind of looking at the model. It's a market focus.

And a fee for service service lines as well and so I think those are the ways in which we're kind of looking at the model.

It's a market.

Yes, it's we are looking at rooftops, we are again looking at the populations.

Speaker #7: We have a combination of value based care assets , some assets that are focused more on fee for service , but truly enable that value based care agenda .

Risk the products and I think through all of that there'll be an output of some actions that we'll take in the near term to position us for long term success of the integrated model likely withdraw from a few geographic markets likely reshape the practices within certain markets, where we remain.

Speaker #7: And it's really important to ensure that kind of integrated model can deliver the best outcomes . And so as we're thinking about the portfolio rationalization , we're taking into account a combination of things like where we have the right clinical quality , where we have the best operating cost performance , where we have the right engagement , and where that model can really be brought to life for both value based and those kind of fee for service service lines as well .

Likely shape.

<unk>.

Let's say the primary delivery system along line with the complementary services things along those.

Speaker #7: And so I think those are the ways in which we're kind of looking at the model . So it's a it's a market focus .

Nature, all very logical I'll actually more constructive but to be constructive sometimes you have to take some things away and Brian.

Speaker #7: It's you know , we are looking at rooftops . We are again looking at the populations , the risk , the products . And I think through all of that there'll be an output of some actions that will take in the near term to position us for long term success of that integrated model .

Krista Nelson: We are looking at rooftops. We are, again, looking at the populations, the risk, the products. I think through all of that, there'll be an output of some actions that we'll take in the near term to position us for long-term success of that integrated model.

And the that one point across Optum and connect a couple of questions in the face of escalating cost trends, what we hear from our payer partners from employers and from patients and providers is they want to value based care system that delivers better quality better experience at lower cost care and Thats whats optum is delivering to our various customers.

Speaker #2: Likely withdrawal from a few geographic markets will likely reshape the practices within certain markets where we remain. This will likely shape, let's say, the primary delivery system along with the complementary services.

Stephen Hemsley: Likely withdraw from a few geographic markets, likely reshape the practices within certain markets where we remain, likely shape the, let's say, the primary delivery system along line with the complementary services, things along those lines. All very logical, all actually more constructive. To be constructive, sometimes you have to take some things away. Right.

Thanks. Good question next please.

Our next question comes from Erin Wright with Morgan Stanley.

Speaker #2: Things along those that nature all very logical . I'll actually more constructive . But to be constructive , sometimes you have to take some things away .

Great. Thanks, So I have a follow up on that front is there anything you can quantify a break down for us in terms of their staff the turnaround App in house like how much is just walking away from <unk> 16, the fee for service business.

Speaker #2: Right . Just in the dad one point across Optum and connect a couple questions . You know , in the face of escalating cost trends , what we hear from our payer partners , from employers and from patients and providers as they want to value based care system that delivers better quality , better experience and lower cost of care .

[Analyst 3]: Just one point across Optum and connect a couple of questions. In the face of escalating cost trends, what we hear from our payer partners, from employers, and from patients and providers is they want a value-based care system that delivers better quality, better experience, and lower cost care. That's what Optum is delivering to our various customers.

Presumably that could be addressed a little bit quicker right and and how much is just integrating into a consolidating consolidated operating modeling and then what sort of incremental investment that you can quantify at this point that needs to go into that business as well, presumably business I'll get you to 6% to 8% margin in 2028.

Speaker #2: And that's what Optum is delivering to our various customers. Thanks. Good question. Next, please.

Stephen Hemsley: Thanks. Good question. Next, please.

Speaker #1: Our next question comes from Erin Wright with Morgan Stanley .

And that's just backend weighted is that.

Operator: Our next question comes from Aaron Wright with Morgan Stanley.

The right way to think about it.

Speaker #25: Great . Thanks . So I have a follow up on that front . Is there anything you can quantify or break down for us in terms of those steps to turn around ?

I think Directionally I don't think we can achieve the level of precision you might be looking for something like that just because this does blend together, but christa you on a response.

[Analyst 4]: Great, thanks. I have a follow-up on that front. Is there anything you can quantify or break down for us in terms of those steps to turn around Optum Health? Like, how much is just walking away from risk? How much is fixing the fee-for-service business? Presumably, that could be addressed a little bit quicker, right? How much is just integrating into a consolidated operating model? What sort of incremental investments that you can quantify at this point need to go into that business as well? Presumably, does this all get you to 6 to 8% margin in 2028, and it's just back-end weighted. Is that the right way to think about it? Thanks.

Speaker #25: Optum health , like how much is just walking away from risk ? How much is fixing the fee for service business and presumably that could be addressed a little bit quicker , right .

Yeah. Thanks for that question Erin so.

Let me just kind of start where you ended which as you know.

Slightly more back half weighted but use it expect progress throughout here and while we might see faster progress in some fee for service improvement Patrick highlighted whether that's kind of productivity are scheduling or improving access our collection rate.

Speaker #25: And and how much is just integrating into a consolidating consolidated operating model and , and then what sort of incremental investments that you can quantify at this point that needs to go into that business as well .

Speaker #25: Presumably does this all get you to 6 to 8% margin in 2028 ? And it's just back and waited . Is that the right way to think about it ?

Also start to see some progress on our value based portfolio as well so think of things like medical management. The work, we're doing with our payers. The work we're doing to curate our networks and also the work we're doing to manage operating cost discipline. So these things really all come together in this integrated model.

Speaker #25: Thanks .

Speaker #2: I think directionally I don't think we can achieve the level of precision you might be looking for something like that just because this this does blend together .

Stephen Hemsley: I think directionally, I don't think we can achieve the level of precision you might be looking for in something like that just because this does blend together. Krista, do you want to respond?

Speaker #2: But Krista , do you want to respond ?

Speaker #7: Yeah , yeah . Thanks for the question , Erin . So let me just kind of start where you ended , which is , you know , likely more back half weighted , but you should expect progress throughout here .

Krista Nelson: Yeah. Thanks for the question, Aaron. Let me just kind of start where you ended, which is, you know, likely more back half weighted, but you should expect progress throughout here. While we might see faster progress in some fee-for-service improvement, Patrick highlighted whether that's kind of productivity or scheduling or improving access or collection rate, you will also start to see some progress on our value-based portfolio as well. Think of things like, you know, medical management, the work we're doing with our payers, the work we're doing to curate our networks, also the work we're doing to manage operating cost discipline. These things really all come together in this integrated model, but maybe some faster progress in certain areas while you'll still continue to see kind of progress against the holistic model.

Maybe some faster progress in certain areas, while youll still continue to see kind of progress against the holistic note for example, you've kind of.

A little bit further ahead in the eastern region on this and seen some.

Speaker #7: And , you know , while we might see faster progress in some fee for service improvement , you know , Patrick highlighted whether that's kind of productivity or scheduling or improving access or collection rate .

Impact on then that's a good example of how this will progress right.

So a pickup in terms of.

Speaker #7: You will also start to see some progress on our value based portfolio as well . So think of things like , you know , medical management , the work we're doing with our payers , the work we're doing to curate our networks , also the work we're doing to manage operating cost discipline .

Volume there greater capture greater reach.

Okay next question please.

Our next question comes from Dave Windley with Jefferies.

Hi, Good morning, Thanks for taking my questions squeezing me and my question is related somewhat but I think earlier in the call you quantified that that half of your headwind I think the 28 headwind for 2026, you plan to mitigate through <unk>.

Speaker #7: So these things really all come together in this integrated model . But maybe some faster progress in certain areas while you'll still continue to see kind of progress against the holistic model .

Speaker #2: But for example , you've kind of a little bit further ahead in the eastern region on this . And seen some impact on that .

Stephen Hemsley: For example, you're a little bit further ahead in the Eastern region on this and seen some impact on that, and that's a good example of how this will progress, right?

Contracting and I wanted to make sure I understood is that across the portfolio of payers are you, mostly harvesting that from the UHC portion.

Speaker #2: And that's a good example of how this will progress . Right ?

Speaker #7: Absolutely .

Krista Nelson: Absolutely.

Speaker #2: So a pickup in in terms of volume there , greater capture , greater reach okay . Next question please .

Stephen Hemsley: A pickup in terms of volume there, greater capture, greater reach. Okay. Next question, please.

The non UHC portion and then is the did I hear correctly that BBC lives you expect to decline by 10% is that interwoven in that at all.

Speaker #1: Our next question comes from Dave Windley with Jefferies .

Operator: Our next question comes from Dave Windley with Jefferies.

Speaker #26: Hi . Good morning . Thanks for taking my question . Squeezing me in . My question is related somewhat , but I think earlier in the call you quantified that that half of your headwind , I think the V 28 headwind for 2026 , you plan to mitigate through Recontracting .

[Analyst 4]: Hi, good morning. Thanks for taking my question, squeezing me in. My question is related somewhat, but I think earlier in the call, you quantified that half of your headwind, I think the V28 headwind for 2026, you plan to mitigate through re-contracting. I wanted to make sure I understood, is that across the portfolio of payers, are you mostly harvesting that from the UnitedHealthcare portion, the non-UnitedHealthcare portion? Did I hear correctly that value-based care Lives, you expect to decline by 10%? Is that interwoven in that at all? Thank you.

Thank you.

Thanks, Chris do you want to respond yes, absolutely so yes, so like.

Like Patrick mentioned, so we sought to overcome half of the V 28 headwind through our payer contracting efforts, which would include all payers and we have completed that and we're about 90% complete with that with our contracting with line of sight to the rest by the end of the year. So I feel good about that that encompasses.

Speaker #26: And I wanted to make sure I understood is that across the portfolio of payers , are you mostly harvesting that from the UHC portion ?

Rates as well as product and benefits and we've talked a little bit about some market exits inside.

Speaker #26: The non UHC portion and then is the did I hear correctly that VBC lives ? You expect a decline by 10% ? Is that interwoven in that at all ?

Inside of that so exiting more than 40% of our PPL footprint was also kind of <unk>.

Part of that exercise, but again across all of our Payors.

Speaker #26: Thank you .

Speaker #2: Thanks . So Krista do you want to respond .

Stephen Hemsley: Thanks. Krista, do you want to respond?

And then you asked about membership as well with the approximately 10% reduction is that pace into next year.

Speaker #7: Yeah , absolutely . So yep . So like Patrick mentioned so we sought to overcome half of the v 28 headwind through our payer contracting efforts , which would include all payers .

Krista Nelson: Yeah, absolutely. Like Patrick mentioned, we sought to overcome half of the V28 headwind through our payer contracting efforts, which would include all payers. We have completed that, and we're about 90% complete with our contracting with line of sight to the rest by the end of the year. I feel good about that. That encompasses rates as well as product and benefits. We've talked a little bit about some market exits inside of that. Exiting more than 40% of our PPO footprint was also part of that exercise, again, across all of our payers. You asked about membership as well with the approximately 10% reduction as we pace into next year. We probably will see even some additional PPO exits as part of the work we continue to do with all of our payers and the work that we're going to do to finish that work.

Again, we probably will see even some additional PPL.

Exits as part of the work we continue to do with all of our payers and the work that we're going to do to finish that work, but then that would be.

Speaker #7: And we have completed that . And we're about 90% complete with that with our contracting with line of sight to the rest , by the end of the year .

Speaker #7: So feel good about that . You know that encompasses rates as well as product and benefits . And we've you know , we've talked a little bit about some market exits inside of that .

Really a direct result of actions, we're taking to optimize our portfolio. So again products market footprint and the risk that is appropriate for this model.

Leaning into products that lend themselves to management okay.

Lastly.

Speaker #7: was also kind of part of that exercise . But again , across all of our payers and then , you know , you asked about membership as well with the approximately 10% reduction as we pace into next year , you know , again , we probably will see even some additional PPO exits as part of the work .

Good question next please.

And our next question comes from Jessica <unk> with Piper Sandler.

Hi, guys. Thanks, very much for the question.

Can you describe just the tone of any recent conversations you may have had with CMS.

Their receptivity and posture towards M&A, what do you think CMS is focused on from a stars risk adjustment and a rates perspective, and UHD lobbying for thanks.

Speaker #7: We continue to do with all of our payers and the work that we're going to do to finish that work . But then that would be , you know , just really a direct result of actions we're taking to optimize our portfolio .

Krista Nelson: That would be just really a direct result of actions we're taking to optimize our portfolio. Again, products, market footprint, and the risk that is appropriate for this model. Thanks.

Speaker #7: So again , products market footprint and the risk that is appropriate for this model , thanks .

You guys can decide which one respond to that.

We're not too.

Lobbying for anything in particular, so please yes.

Speaker #2: To products that lend themselves to management .

Stephen Hemsley: Leaning to products that lend themselves to management.

Speaker #7: Exactly .

Krista Nelson: Exactly.

Speaker #2: Good question . Next please .

Thanks for the question.

Stephen Hemsley: Good question. Next, please.

As I think about CMS receptivity, we've been.

Speaker #1: And our next question comes from Jessica Tyson with Piper Sandler .

Operator: Our next question comes from Jessica Tasson with Piper Sandler.

Encouraged and continue to be very encouraged of the receptivity of this administration to have conversations with industry about ways to modernize and ways to improve this already very popular program. This is Ben.

Speaker #27: Hi guys . Thanks very much for the question . Can you describe just the tone of any recent conversations you may have had with CMS ?

[Analyst 4]: Hi guys, thanks very much for the question. Can you describe just the tone of any recent conversations you may have had with CMS, their receptivity and posture towards Medicare Advantage? What do you think CMS is focused on from a STARS, risk adjustment, and Medicare Advantage rates perspective? What is UnitedHealthcare lobbying for? Thanks.

Speaker #27: Their receptivity and posture towards Ma ? What do you think CMS is focused on from a risk adjustment and Ma rates perspective ? And and what is lobbying for ?

Direct contrast to what we experienced over the previous administration.

Speaker #27: Thanks .

Speaker #2: You guys can decide which one respond to that . I'm you know , we're not lobbying for anything in particular . So please .

And we've always.

Stephen Hemsley: You guys can decide which one responds to that. We're not lobbying for anything in particular, so please.

Enjoy and appreciate the efforts to be able to have these facts pack based conversations around how to modernize the program and feel like that's the best way to get to a constructive answer in a constructive way.

Speaker #3: Yeah . Thanks , Jessica , for the question . You know , as I think about CMS receptivity , we've been encouraged and continue to be very encouraged of the receptivity of this administration to have conversations with industry about ways to modernize and ways to improve this already very popular program .

Tim Noel: Yeah. Thanks, Jessica, for the question. As I think about CMS receptivity, we've been encouraged and continue to be very encouraged by the receptivity of this administration to have conversations with industry about ways to modernize and ways to improve this already very popular program. This is in direct contrast to what we experienced over the previous administration. We always enjoy and appreciate the effort to be able to have these fact-based conversations around how to modernize the program and feel like that's the best way to get to a constructive answer in a constructive way to move forward.

To move forward. So encouraged again on just the level of <unk>.

The activity and the level of conversation that we have with the administration and we will continue to do that and continue to bring to them ideas.

That we think are ideas that are the best path forward that provide some level of stability for beneficiaries and also modernize the program and the process.

Speaker #3: This is in direct contrast to what we experienced over the previous administration , and we always enjoy and appreciate the efforts to be able to have these fax based , fact based conversations around how to modernize the program and feel like that's the best way to get to a constructive answer and a constructive way to move forward .

Absolutely. So we have time for one question.

Remaining.

So next one please.

Our last question comes from Whit Mayo with Leerink partners.

Alright, Thanks, Tim.

Speaker #3: So , you know , encouraged again on just the level of activity and the level of conversation that we have with the administration and will continue to do that .

Tim I was just hoping that you could comment more on the provider coding stuff that you were talking about we hear pushback on that for many health systems and then maybe any observations that you could share on the independent dispute resolution process and actions, we're taking there or the impact on trend. Thanks.

Tim Noel: Encouraged again on just the level of activity and the level of conversation that we have with the administration, and we'll continue to do that and continue to bring to them ideas that we think are ideas that are the best path forward that provide some level of stability for beneficiaries and also, you know, modernize the program and the process.

Speaker #3: And continue to bring to them ideas that we think are ideas that are the best path forward , that provide some level of stability for beneficiaries , and also , you modernize the program in the process .

Yes. Thanks for the question wet so I think about some of what we're seeing in trend there certainly is mena.

Speaker #2: Yeah , absolutely . So we have time for one question remaining . So next one , please .

Stephen Hemsley: Yeah, absolutely. We have time for one question. Remember.

Meaningful portion of it that is related to more service intensity per encounter being billed.

Operator: Next one, please.

Speaker #1: Our last question comes from Whit Mayo with Leerink Partners .

Stephen Hemsley: Our last question comes from Whit Mayo with Leerink Partners.

By health systems and by providers.

The waste that's coming through our higher cost sites of service were lower costs are available think lab <unk> E R and surgery.

Speaker #28: All right . Thanks . Tim I was just hoping that you could comment more on the provider coding stuff that you were talking about .

Operator: All right, thanks. Tim, I was just hoping that you could comment more on the provider coding stuff that you were talking about. We hear pushback on that from many health systems, and maybe any observations that you could share on the independent dispute resolution process and actions you're taking there, or the impact on trend. Thanks.

Speaker #28: We hear pushback on that from many health systems . And then maybe any observations that you could share on the independent dispute resolution process and actions you're taking there or the impact on trend ?

Also seen more services being attached to the ER visits and hospital visits.

An increase in the number of specialists that are rounding.

Speaker #28: Thanks .

Speaker #3: Yeah , thanks for the question , whit . So , you know , when I think about some of what we're seeing in trend , there certainly is a meaningful portion of it that is related to more service intensity per encounter .

Tim Noel: Yeah, thanks for the question, Whit. When I think about some of what we're seeing in trend, there certainly is a meaningful portion of it that is related to more service intensity per encounter being billed by health systems and by providers. Some of the ways that's coming through are higher cost sites of service where lower costs are available. Think lab, think surgery. I'm also seeing more services being attached to visits and hospital visits, an increase in the number of specialists that are rounding per inpatient stays, and a bias towards some higher DRG weighting than we've seen in the past. It is happening fairly consistently across the country, but there are also some very significant outliers. One part of what we're doing is addressing these outliers. We have to keep medical costs and healthcare affordable for consumers, affordable for states, the federal government.

Our inpatient stays.

And then a bias towards some higher DRG weighting than we've seen in the past.

It is happening.

<unk> consistently across the country, but then also have some fairly very significant outliers in one part of what we're doing is we are addressing these outliers we have to we have to keep med.

Medical costs in health care affordable for consumers of Carnival for states to federal government.

So we will be taking some network actions, where we need to to keep health care affordable. We're also using making more use of AI in our payment integrity programs.

Increasing some of our payment policy.

As well as our clinical affordability programs to address some of what we're seeing.

As I think about the <unk> process, it's not something that would spike out in terms of material.

A material trend driver from this distance, but certainly something that we're keeping an eye on.

Pretty carefully.

Great.

Great conversation today, it's all we really have time for I want to thank you all for joining us and we look forward to talking with you again.

Tim Noel: We will be taking some network actions where we need to keep healthcare affordable. We're also making more use of AI in our payment integrity programs, increasing some of our payment policy efforts, as well as our clinical affordability programs to address some of what we're seeing. As I think about the IDR process, it's not something that would spike out in terms of a material trend driver from this distance, but certainly something that we're keeping an eye on pretty carefully.

And engaging with you before we get to January and in January we will provide both our year end results as well as guidance for 2026. So thank you all for joining us this morning.

Operator: Great. Thanks. Great conversation today. That's all we really have time for. I want to thank you all for joining us, and we look forward to talking with you again and engaging with you before we get to January. In January, we will provide both our year-end results as well as guidance for 2026. Thank you all for joining us this morning.