Q2 2026 UnitedHealth Group Inc Earnings Call

July 16, 2026

Speaker #1: Good morning, and welcome to the United Health Group's second quarter 2026 earnings conference call. A question-and-answer session will follow United Health Group's prepared remarks.

Speaker #1: As a reminder, this call is being recorded. Here are 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.

Speaker #1: 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 filing.

Speaker #1: Good morning. Good morning. Welcome Welcome to the UNITEDHEAL GROUP to the UNITEDHEAL GROUP Q4, 2026 earnings conference Q4, 2026 earnings conference call. A question and answer session call.

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 www.unitedhealthgroup.com.

Speaker #1: A question on the next session: we'll will follow UNITEDHEAL GROUP's prepared follow UNITEDHEAL GROUP's prepared report. As a reminder, this report. As a reminder, this call call is being recorded.

Speaker #1: is being recorded. Your. Your. Important introductory Important introductory information. This call contains coordinating information. This call contains coordinating statements under U.S. Federal Securities statements under U.S.

Speaker #1: Federal Securities Laws. These statements are subject to Laws. These statements are subject to risk risk management and the expected cost of actual management leads that could cause actual results to different material leads from historically results for the different material leaks from historical experience or present experienced or present expectations.

Speaker #1: Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated July 16, 2026, which may be accessed from the investor relations page of the company's website.

Speaker #1: expectations. A description of some of the risk A description of some of the risk management leaks can be found in the reports we management leads can be found in the reports we filed, file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.

Speaker #1: I will now turn the conference over to the chairman and chief executive officer of United Health Group, Stephen Hemsley.

Speaker #1: This call will also reference non-grant amounts. A reconciliation of the non-grant amounts is available on the financial and earnings reports section of the company's investor relations page, at www.unitedhealthgroup.com.

Speaker #2: Thank you. Good morning, everyone, and thank you for joining us. Our second quarter results and updated full year 2026 outlook demonstrate continuing progress toward delivering more consistent and dependable performance.

Speaker #1: Information presented on this commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAP amounts. A reconciliation of the non-GAAP GAAP amount is available on the financial and earnings reports section of the company's investor relations page, at www.unitedhealthgroup.com.

Speaker #1: Information presented on this call call is contained in the earnings release issued is contained in the earnings release issued this this morning and in our Form morning and in our Form 840 840 dated July 16, dated July 16, 2026, which may be accessed from the 2026, which may be accessed from the investor investor relations page of the company's relations page of the company's website.

Speaker #2: They are a sign of stronger, broad-based performance disciplines taking hold in each of our businesses. And a restless desire to drive mission-aligned change across the enterprise and advance our social impact.

Speaker #1: website. I will now turn the conference I will now turn the conference over to the Chairman and Chief over to the chairman and chief executive Executive Officer of UNITEDHEAL GROUP, officer of UNITEDHEAL GROUP, Stephen Stephen Hemsley.

Speaker #1: Hemsley.

Speaker #2: United Healthcare has improved performance in its Medicare businesses through thoughtful benefit planning and design, all while remaining respectful of persistently elevated medical costs. Our Medicaid business is in line with expectations, as we continue to work with states on ensuring appropriate rates.

Speaker #2: Thank you. Good morning, everyone, and thank you for joining Thank you. Good morning, everyone, and thank you for joining us. Our second quarter result and us.

Speaker #2: Our second quarter result and updated full year updated full year 2026 2026 outlook demonstrate outlook demonstrate continuing progress toward delivering more continuing progress toward delivering more consistent and dependable consistent and dependable performance.

Speaker #2: performance. They are a sign of They are a sign of stronger broad-based performance stronger broad-based performance disciplines taking hold in each of our disciplines taking hold in each of our businesses.

Speaker #2: Our commercial benefits business, consistent with the broader and more diverse commercial market it serves, continues to experience higher-than-expected cost trends due to factors Tim Knoll will discuss shortly.

Speaker #2: businesses. And a restless And a restless desire to drive desire to drive mission-aligned change across the mission-aligned change across the enterprise to advance our social enterprise to advance our social impact.

Speaker #2: impact. UNITEDHEAL UNITEDHEAL CHAIR has improved performance in its CARE has improved performance in its Medicare Medicare businesses through thoughtful businesses through thoughtful benefits benefits planning and design, planning and design, all while all while remaining respectful of remaining respectful of persistently elevated medical persistently elevated medical costs.

Speaker #2: At Optum, we're seeing building momentum from Optum Health, as the business recenters back to its integrated, value-based care delivery model. This resulted in another quarter of improved care management and greater operating discipline.

Speaker #2: costs. Our Medicare business is Our Medicare business is in line with expectations as in line with expectations as we we continue to work with states on continue to work with states on ensuring appropriate ensuring appropriate rates.

Speaker #2: Optum Rx continues to perform to plan as transparency initiatives we announced early this year resonate well in the marketplace. Optum Insight, also on plan, remains on a multi-year path of reinvestment and innovation.

Speaker #2: rates. Our commercial benefits Our commercial benefits business, consistent with the broader and business, consistent with the broader and more more diverse commercial market it diverse commercial market it serves, continues to experience serves, continues to experience higher-than-expected cost trends due higher-than-expected cost trends due to to factors to noel discussed factors to noel discussed shortly.

Speaker #2: As we bring modern, intelligent technologies and services to the areas of greatest need in the health system. We believe Optum Insight is exceptionally well-positioned to help modernize and simplify the health system as it brings AI-enabled tools and services to market.

Speaker #2: shortly. At At Optim, we're seeing Optim, we're seeing building momentum from Optim building momentum from Optim Health as the business recenters back to Health as the business recenters back to its its integrated value-based integrated value-based care care delivery model.

Speaker #2: delivery model. This This resulted in another quarter of resulted in another quarter of improved improved care management and greater care management and greater operating operating discipline.

Speaker #2: discipline. Optim Rx continues to perform Optim Rx continues to perform to to plan, transparently initiatives plan, transparently initiatives we we announced early this year announced early this year, resonate well in the resonate well in the marketplace.

Speaker #2: Across the enterprise, we're focused on serving consumers and care providers in ways that are reliable, affordable, and transparent. That requires us to pay close attention to areas where the system isn't working well enough.

Speaker #2: marketplace. Optim Insight also on Optim Insight, also on plan, remains on a plan remains on a multi-year multi-year path of reinvestment and path of reinvestment and innovation.

Speaker #2: innovation. As we bring modern, As we bring modern, intelligent technologies that intelligent technologies that service the areas of greatest need in service the areas of greatest need in the the health system.

Speaker #2: Areas including care approvals, accuracy of information and speed of response, access and scheduling, digital services, care path navigation, and more. We are committed to making the health system work better for all stakeholders.

Speaker #2: health system. We We believe Optim Insight is believe Optim Insight is exceptionally well positioned to help exceptionally well-positioned to help modernize and modernize and simplify the health simplify the health system system as it brings AI-enabled as it brings AI-enabled tools and services to tools and services to market.

Speaker #2: market. Across the Across the enterprise, we're focused on serving enterprise, we're focused on serving consumers and care providers in ways consumers and care providers in ways that that are reliable, are reliable, affordable, and affordable, and transparent.

Speaker #2: By simplifying processes, by being clearer, more consistent, and faster in the experience we offer, and by redesigning and modernizing that experience altogether. AI technology is helping us move faster, we're using it to improve service interactions, reduce administrative burden, and support better decision-making.

Speaker #2: transparent. That requires us to play a That requires us to play a close close attention to areas where attention to areas where the the system isn't working well system isn't working well enough.

Speaker #2: enough. Areas including care Areas including care approval, accuracy of approval, accuracy of information and speed of information and speed of response, response, access and scheduling, access and scheduling, digital services, care digital services, care path path navigation, and navigation, and more.

Speaker #2: Always in service of improved experiences and outcomes for both patients and care providers. United Health Group has a long history of evolving to meet the needs of a constantly changing U.S.

Speaker #2: more. We are committed to making the We are committed to making the health system work better for all health system work better for all stakeholders.

Speaker #2: By simplifying stakeholders. By simplifying processes, by being processes, by being clearer, more consistent, and clearer, more consistent, and faster in faster in the experience we offer, and the experience we offer, and by redesigning and modernizing by redesigning and modernizing that that experience experience altogether.

Speaker #2: health system. That evolution today includes a tech-forward view, actively and appropriately embracing an AI paradigm for our businesses. A management team with skills and vision to help in building a more advanced health system and an ever-evolving organizational structure and culture aligned to that system.

Speaker #2: altogether. AI AI technology and health is helping us move technology is helping us move faster; we're using it to improve faster, we're using it to improve service interactions, service interactions, reduce administrative burden, and support reduce administrative burden, and support better decision-making. better decision-making.

Speaker #2: Always in service of improved Always in service of improved experiences and outcomes for experiences and outcomes for both both patients and care patients and care providers.

Speaker #2: UNITEDHEAL GROUP providers. UNITEDHEAL GROUP has a has a long history of evolving to long history of evolving to meet meet the needs of a constantly changing the needs of a constantly changing U.S.

Speaker #2: Our operating structure today broadly reflects a set of highly regulated benefit businesses and a complementary set of products and services for patients, care providers, and customers.

Speaker #2: U.S. health system. That health system. That evolution today includes a evolution today includes a tech-forward tech-forward view, actively view, actively and appropriately embracing an and appropriately embracing an AI paradigm for our AI paradigm for our businesses.

Speaker #2: We will continue to look to build and evolve ahead of the health system itself. We're making solid, early progress, both in how we better approach those we serve and in our results.

Speaker #2: businesses. A management team with A management team with skills, vision, to help skills, vision, to help in in building a more advanced health building a more advanced health system and an system and an ever-evolving organizational ever-evolving organizational structure and culture aligned with that structure and culture aligned with that system.

Speaker #2: We have much more work ahead and need to continue to get better by focusing on what matters most, with solid management and execution disciplines, aligned to our mission to better serve people and the health system itself.

Speaker #2: Our operating system. Our operating structure today broadly structure today broadly reflects reflects a set of a set of highly highly regulated Medicare regulated benefit businesses businesses and a complementary set of products and a complementary set of products and and services for patients, care services for patients, care providers, and customers.

Speaker #2: With that, I'll turn it over to Tim Knoll.

Speaker #3: Thanks, Steve. The pricing, benefit design, and market actions we've taken over the past year have been central in supporting our second quarter results and improved full-year outlook.

Speaker #2: providers, and customers. We will We will continue to look to build and evolve continue to look to build and evolve ahead ahead of the health system of the health system itself.

Speaker #2: itself. We're We're making solid, early making solid, early progress, progress, both at how we better approach both at how we better approach those those we serve and in our we serve and in our results.

Speaker #3: As you have seen, United Healthcare's overall performance in the second quarter exceeded expectations. Driven by better results in Medicare Advantage, while commercial benefits remain pressured.

Speaker #2: We have much more work results. We have much more work ahead, and need to continue to get ahead and need to continue to get better, better by focusing on what matters focusing on what matters most, most, with solid management and with solid management and execution execution discipline, aligned to our mission to discipline, aligned to our mission to better serve people and the health better serve people and the health system system itself.

Speaker #3: I'll start with medical costs. Through the first half of the year, we are seeing divergence within our portfolio. Medical cost trends in Medicare are still running well above historical levels, but below our expectations so far in 2026.

Speaker #2: itself. With that, I'll turn it With that, I'll turn it over to Tim Noel. over to Tim Noel.

Speaker #3: Thank Thank you. you. Surprising benefit design and market Surprising benefits design and market actions we've taken over the past actions we've taken over the past year year have been central in supporting our second have been central in supporting our second quarter results, and quarter results, and improved improved full-year outlook.

Speaker #3: A primary reason for trend being below our expectations is our own initiatives. Including benefit design, care management models, and network curation. Other factors have an influence as well.

Speaker #3: full-year outlook. As you've As you've seen, UNITEDHEAL CHAIR's seen, UNITEDHEAL CARE's overall overall performance in the second performance in the second quarter quarter exceeded exceeded expectations.

Speaker #3: expectations. Driven by better results in Medicare Driven by better results in Medicare Advantage, while commercial Advantage, while commercial benefits remain benefits remain pressuring. I'll start with medical pressuring.

Speaker #3: Including prior-year development, a more favorable respiratory season, and weather patterns. We expect the 2026 Medicare medical cost trend to come in below our initial estimate, of around 10%.

Speaker #3: I'll start with medical costs. costs. Through the first half of the year, we are Through the first half of the year, we are seeing divergence within our seeing divergence within our portfolio.

Speaker #3: portfolio. Medical cost trends in Medical cost trends in Medicare are still running well Medicare are still running well above historic levels, but above historical levels, but below our expectations so below our expectations so far in far in 2026.

Speaker #3: A primary reason for 2026. A primary reason for trending below our expectations trending below our expectations is Medicare is our own is Medicare is our own initiative.

Speaker #3: Commercial costs are stubbornly high, rising above expectations. Which we believe is consistent with what is being experienced across the sector. Turning to the overall performance of our individual benefit offerings.

Speaker #3: Including benefits initiative. Including benefit design, care management design, care management models, and network models, and network curation. Other factors have curation. Other factors have influenced influenced as well.

Speaker #3: Medicare delivered a strong second quarter. Membership retention was better than previously anticipated. We now expect full-year Medicare Advantage enrollment to decline by approximately 1.1 million and Medicare margins to finish 2026 above 3%.

Speaker #3: as well. Including Including prior year development, a more prior year development, a more favorable favorable respiratory season, and weather respiratory season, and weather patterns.

Speaker #3: patterns. We expect the We expect the 2026 Medicare medical 2026 Medicare medical cost cost trend to come in below our initial trend to come in below our initial estimates of around estimate of around 10%.

Speaker #3: Commercial 10%. Commercial costs are stubbornly high, costs are stubbornly high, rising rising above expectations. Which above expectations. Which we we believe is consistent with what believe is consistent with what is being is being experienced across the experienced across the sector.

Speaker #3: Looking to our 2027 bids, our benefit planning remains disciplined and grounded in the current trend environment. We will continue to support program and margin stability through actions including benefit adjustments, and selective changes in market participation.

Speaker #3: sector. Turning to the Turning to the overall performance of our the overall performance of our individual individual benefits offerings. benefit offerings. Medicare Medicare delivers a strong second delivers a strong second quarter.

Speaker #3: In Medicaid, overall performance during the quarter including cost trend was broadly in line with expectations. We are beginning to see early signs of improvement from initiatives including those targeting elevated behavioral health cost trends but we expect Medicaid margins to remain pressured for 2026.

Speaker #3: quarter. Membership retention was better Membership retention was better than than previously anticipated. previously anticipated. We We now expect full-year Medicare now expect full-year Medicare Advantage enrollment to decline by Advantage enrollment to decline by approximately 1.1 million approximately 1.1 million and and Medicare margins to finish Medicare margins to finish 2026 up by 2026 up by 3%.

Speaker #3: Looking to 3%. Looking to our our 2027 bids, our 2027 bids, our benefit planning remains disciplined benefit planning remains disciplined and and grounded in the current trend grounded in the current trend environment.

Speaker #3: Our focus is on closing the gap between lagging reimbursement rates and underlying medical cost trends while continuing to partner closely with states to support the long-term sustainability of Medicaid benefits and support them in identifying and reducing fraud, waste, and abuse.

Speaker #3: environment. We will continue to support We will continue to support programs and margin stability through programs and margin stability through actions actions including benefits development including benefit development and selective changes in and selective changes in market market participation.

Speaker #3: participation. In Medicaid, overall In Medicaid, overall performance during the quarter, including performance during the quarter, including cost trend, was broadly cost trend, was broadly aligned aligned with expectations.

Speaker #3: with expectations. We are We are beginning to see early signs of beginning to see early signs of improvement from the initiatives, including improvement from the initiatives, including those those targeting elevated targeting elevated behavioral health cost behavioral health cost trends but trends but we expect Medicare margins to we expect Medicare margins to remain pressured for remain pressured for 2026.

Speaker #3: Within our commercial offerings, as I noted, we are not yet seeing evidence of cost trend moderation. In fact, it is the opposite. With medical cost trends modestly above 11% level we previously saw.

Speaker #3: 2026. Our focus is on closing Our focus is on closing the gap between lagging the gap between lagging reimbursement reimbursement rates and underlying rates and underlying medical medical cost trends while continuing cost trends, while continuing to to partner closely with states to partner closely with states to support the long-term support the long-term sustainability sustainability of Medicaid of Medicaid benefits and benefits and support them in identifying and support them in identifying and reducing fraud-based reducing fraud-based abuse.

Speaker #3: The primary drivers of pressure from the independent resolution process under the No Surprises Act, which applies only to commercial plans. And more aggressive billing practices among providers.

Speaker #3: Especially higher service and coding intensity and higher cost per encounter that result from the more fee-for-service orientation of commercial plans. At this distance, commercial margin recovery will remain a focus area longer than originally anticipated.

Speaker #3: abuse. Within Within our commercial offerings, as I our commercial offerings, as I noted, we are now yet seeing evidence noted, we are not yet seeing evidence of cost trend of cost trend moderation.

Speaker #3: moderation. In fact, it is the In fact, it is the opposite. With medical cost trends opposite. With medical cost trends modestly above modestly above 11% 11% where we previously where we previously saw.

Speaker #3: saw. The primary The primary drivers of pressure from an independent drivers of pressure from the independent resolution process under the No resolution process under the Noel Surprises Surprises Action, which applies Action, which applies only to only to commercial plans, and commercial plans, and more more aggressive billing practices among aggressive billing practices among providers.

Speaker #3: Returning to United Healthcare as a whole. We are confident in being able to deliver meaningful earnings growth in 2026 and into 2027. With the reinvestments we are making in the business to build a stronger, more durable foundation for 2027 and beyond.

Speaker #3: providers. Especially Especially higher service and coding higher service and coding intensity and higher cost trend density and higher cost trend counters counters that result in a more that result in a more fee-for-service orientation of commercial fee-for-service orientation of commercial plans.

Speaker #3: Of equal, if not more importance, we remain intent on modernizing essential healthcare experiences to improve how consumers, and care providers, experience the health system.

Speaker #3: plans. At this At this distance, commercial distance, commercial margin recovery will remain a margin recovery will remain a focus area longer than originally focus area longer than originally anticipated.

Speaker #3: For example, in the quarter we committed to eliminating by the end of this year 30% of prior authorization volume and nearly two-thirds of prior authorization requirements for pediatric care.

Speaker #3: anticipated. Returning to UNITEDHEAL CARE as a Returning to UNITEDHEAL CHAIR as a whole, we are confidently able to whole, we are confidently able to deliver meaningful earnings growth in deliver meaningful earnings growth in 2026 and into 2026 and into 2027.

Speaker #3: With the reinvestments we 2027. With the reinvestments we are are making in the business to build a making in the business to build a stronger, stronger, more durable foundation for more durable foundation for 2027 and 2027 and beyond.

Speaker #3: We continue to take concrete steps to reduce complexity and increase speed by further simplifying prior authorization. Increasing consumer responsive digital experiences providing greater support to rural hospitals and care providers offering more consumer-centered product information innovation and much more.

Speaker #3: beyond. Of equal and not more Of equal and of more importance, we remain important, we remain content content on modernizing essential on modernizing essential healthcare healthcare experiences to improve health experiences to improve consumers, and care well-consumers, and care providers' experience of health providers' experience of the health systems.

Speaker #3: For example, in system. For example, in the quarter we committed to eliminating by the quarter we committed to eliminating by the the end of this year end of this year 30% of prior authorization 30% of prior authorization volume and nearly two-thirds of volume and nearly two-thirds of prior authorization requirements for prior authorization requirements for pediatric care.

Speaker #3: AI is both an enabler and accelerant to this effort. Where early in this work but clearly on the path to improve the healthcare experience and strengthen relationships with our stakeholders.

Speaker #3: pediatric care. We continue to take concrete We continue to take concrete steps to steps to reduce complexity and reduce complexity and increase increase speed by further speed by further simplifying prior simplifying prior authorization.

Speaker #3: Starting with consumers and care providers. And we're confident these efforts will bolster United Healthcare's long-term performance and market position. And now I'll let me hand it to Patrick Connelly.

Speaker #3: authorization. Increasing consumer Increasing consumer responsive digital experiences, responsive digital experiences, providing providing greater support to rural hospitals greater support to rural hospitals and and care providers, offering care providers, offering more more consumer-centered consumer-centric product information and product innovation, and much innovation, and much more.

Speaker #2: Thanks, Tim. As Steve noted, we are seeing positive momentum across Optum, with all three business segments performing in line or ahead of plan through the first half of the year.

Speaker #3: more. AI tools AI has also and enablers can accelerate enabled us in accelerating this this effort. We're early in this effort. We're earning this work and clearly on the path to work clearly on the path to improve the improve the healthcare experience and healthcare experience and strengthen relationships with our strengthen relationships with our stakeholders.

Speaker #2: Optum Health is intently focused on improving its clinical care and operational experience to better serve the 20 million people we care for through primary and specialist care, ambulatory surgery, and home health.

Speaker #3: Starting with consumers stakeholders. Starting with consumers and and care providers. care providers. And And we're confident these efforts will bolster we're confident these efforts will bolster UNITEDHEAL CHAIR's long-term UNITEDHEAL CARE's long-term performance and market performance and market position.

Speaker #2: Over the last year, we have made significant changes in how we operate this business locally and nationally. And are seeing the initial benefits of this approach.

Speaker #3: And now let me end it with Patrick position. And now let me end with Patrick Conway.

Speaker #2: Thanks, Thanks, Tim. Tim. As Steve noted, we are seeing As Steve noted, we are seeing positive positive momentum across systems, with momentum across the system, with all all three business segments performing in three business segments performing in line, or ahead of plan through the line or ahead of plan through the first half first half of the year.

Speaker #3: Conway.

Speaker #2: We are steadfast in our intent to optimize and integrated value-based care system that benefits patients, care providers, and taxpayers. On the clinical side, we are advancing approaches that better support care providers and drive measurable improvements to patient care at lower cost.

Speaker #2: Optum of the year. Optum Health is intently focused on Health is intently focused on improving improving its clinical care and operational its clinical care and operational experience to better serve the 20 experience to better serve the 20 million million people we care for through people we care for through primary and specialty care, primary and specialty care, ambulatory surgery, and home ambulatory surgery, and home health.

Speaker #2: I'll offer a few examples. First, enhanced support for patients during key transitions of care has resulted in approximately 10% reduction in hospitalizations since implementation, late last year, in the western and southern regions.

Speaker #2: health. Over the last year, we have made Over the last year, we have significant changes in how we operate this made significant changes in how we operate this business locally and business locally and nationally.

Speaker #2: nationally. And are seeing the initial benefits of And are seeing the initial benefits of this approach. We are this approach. We are steadfast in our intent to optimize steadfast in our intent to optimize and an integrated value-based care system that integrate a value-based care system that benefits patients, care benefits patients, care providers, and providers, and taxpayers.

Speaker #2: Of Optum Health. Second, home health initiatives to better support patients as they return home. Where they can be managed more comfortably and effectively. Have reduced readmissions.

Speaker #2: taxpayers. On the clinical side, we're On the clinical side, we're advancing advancing approaches that better support care approaches that better support care providers, drive measurable providers, drive measurable improvements, and improvements, and patient care, at lower patient care, at lower cost.

Speaker #2: In pilots, the effort has driven a more than 20% improvement in timely care delivery alongside reductions in acute care utilization and shorter skilled nursing facility stays.

Speaker #2: costs. I'll offer a few I'll offer a few examples. First, enhanced examples. First, enhanced support support for patients during key transitions for patients during key transitions of of care, has resulted in care, has resulted in approximately 10% reduction in approximately 10% reduction in hospitalizations since implementation, hospitalizations since implementation, late last year, in the western late last year, in the western and and southern regions of Optum southern regions of Optum Health.

Speaker #2: And third, in rural health, we've expanded access to care by integrating house calls and home-based care capabilities coupled with treat-in-place offerings for patients with complex chronic and behavioral health conditions.

Speaker #2: Health. Second, Second, home health initiatives to better support home health initiatives to better support patients as they return home, where patients as they return home, where they can be managed more comfortably and they can be managed more comfortably and effectively.

Speaker #2: Today, Optum Health reaches nearly 90% of US counties and conducts approximately 2.5 million rural patient home visits annually. We will expand these programs across our Optum Health footprint by the end of 2026.

Speaker #2: effectively. Have reduced Have reduced readmissions. In pilots, the readmissions. In pilots, the effort has driven a more than 20% effort has driven a more than 20% improvement in timely care delivery, improvement in timely care delivery, alongside reductions in acute care alongside reductions in acute care utilization and shorter utilization and shorter skilled skilled nursing facility nursing facility stays.

Speaker #2: On the operational side of Optum Health, we have established a clear regional and national management focus. This gives us greater and more timely visibility into performance, driving consistent, best-in-class standards across the portfolio.

Speaker #2: stays. And third, in rural health, And third, in rural health, we've expanded access to care we've expanded access to care by by integrating hospital calls and integrating hospital calls and home-based home-based care capabilities coupled care capabilities coupled with with treat-in-place offerings for treat-in-place offerings for patients with complex chronic patients with complex chronic and and behavioral health behavioral health conditions.

Speaker #2: conditions. Today, Optum Health reaches Today, Optum Health reaches nearly 90% of U.S. nearly 90% of U.S. counties and conducts approximately counties and conducts approximately 2.5 million rural 2.5 million rural patient home visits patient home visits annually.

Speaker #2: And deploying technologies to support clinicians in the important work they do. There is real progress on the rollout of AI-based ambient listening capabilities, available to 70% of employed providers today and on track to exceed 90% by year-end.

Speaker #2: We will expand these annually. We will expand these programs across our Optum Health footprint by the end programs across our Optum Health footprint by the end of of 2026.

Speaker #2: 2026. On the operational side of On the operational side of Optum Health, we have established a Optum Health, we have established a clear regional and national clear regional and national management management focus.

Speaker #2: Collectively, these actions are yielding tangible results. Patient experience in our care delivery sites is up approximately 5% year over year. And patient access has expanded by nearly 200,000 more patient-facing hours.

Speaker #2: This gives focus. This gives us us greater and more timely greater and more timely visibility visibility and performance driving and performance driving consistent best-in-class consistent best-in-class standards standards across the store for sale, and across the board for sale, and deploying technology to support deploying technology to support clinicians clinicians and the important work they and the important work they do.

Speaker #2: We are in the early stages of these efforts. Optum Health will build upon this foundation with additional investments in clinical workflow improvements, and network performance, more deeply embedding AI and automation to further improve operational performance and clinician experience.

Speaker #2: do. There is real progress in the There is real progress from the rollout of AI-based rollout of AI-based ambient ambient listening capabilities, available listening capabilities, available to 70% of employed providers to 70% of employed providers today, and on track to today, and on track to exceed exceed 90% by 90% by year-end.

Speaker #2: year-end. Collectively, these Collectively, these actions are yielding tangible actions are yielding tangible results. Patient experience in results. Patient experience in our our care delivery site is up care delivery site is up approximately 5% approximately 5% year-over-year, and patient access has year-over-year, and patient access has expanded expanded by nearly by nearly 200,000 more patient-facing 200,000 more patient-facing hours.

Speaker #2: Additionally, we entered the 2027 benefit planning season very differently than in years past. Starting with much earlier proactive collaboration with all our payer partners.

Speaker #2: This will translate to greater care coordination for patients while more appropriate lining rates and risks. As our plans and initiatives begin to mature and scale, with disciplined execution, we expect margins to continue to steadily improve.

Speaker #2: hours. We are in the early stages We are in the early stages of these of these efforts. Optum Health has built upon this efforts.

Speaker #2: Optum Health has built upon this foundation with additional investments in foundation with additional investments in clinical clinical workflow improvement and workflow improvement and network network performance, more deeply embedding AI and automation to AI and automation to further improve operational further improve operational performance and clinician performance and clinician experience.

Speaker #2: Turning to Optum RX. For a few years now, we have been leading an industry-wide shift towards transparency, and fee-based services, where we are delivering affordability and better outcomes regardless of pricing structure.

Speaker #2: experience. Additionally, we entered Additionally, we entered the 2027 benefit planning the 2027 benefit planning season very differently than in years season very differently than in years past.

Speaker #2: years past. Starting with much Starting with much earlier proactive collaboration with earlier proactive collaboration with all all our payer partners. This our care partners.

Speaker #2: That's why we continue to win new customers and retain existing ones. With retention rates and the high 90. In May, we announced a new pharmacy care approach based on a monthly per member fees.

Speaker #2: This will translate to greater care will translate to greater care coordination coordination for patients, while more for patients, while more appropriate appropriate lining rates and lining rates and risks.

Speaker #2: As our plans and As our plans and initiatives begin to mature and initiatives begin to mature and scale, scale, with discipline execution, we with discipline execution, we affordable.

Speaker #2: With full PBM and GPO fee transparency, and enhanced consumer tools. Client feedback has been positive and focused on how greater transparency in clinical alignment can address trend challenges shifting the conversation to affordable health outcomes versus economic guarantees.

turning back.

turning back to our app.

For a few years now, we've been leading an industry-wide shift towards transparency and fee Based Services where we are delivering portability and better outcomes regardless of the pricing structure.

For a few years now, we've been leading an industry-wide shift towards transparency and fee-based services, where we are delivering portability and better outcomes regardless of the pricing structure.

Speaker #2: This all builds on our industry-leading commitment last year to pass through 100% of manufacturer rebates to customers by the end of 2027. We are well on our way as we expect to end 2026 with more than 95% of clients on 100% pass-through.

That's why we continue to win new customers and retain existing ones, with retention rates among the highest.

that's why we continue to win, new customers, and retain existing ones with retention rates and the highest

That's why we continue to win new customers and retain existing ones, with retention rates among the highest.

In May, we announced the new pharmacy care approach based on a monthly per-member fee.

With full PDM GPO fee transparency. And then he has the consumer tools.

With full PBM GPO fee transparency. And then he has the consumer tools.

In May, we announced the new pharmacy care approach, based on a monthly per member fee with full PBM and GPO fee transparency. And then he has the consumer tools.

In May, we announced the new pharmacy care approach based on a monthly per-member fee with full PBM, GPO, and transparency. And then it has consumer tools.

Speaker #2: Moving to Optum Insight. AI-enabled approaches continue to gain traction as more payer and provider customers seek differentiated capabilities to drive better performance. The emerging suite of products includes solutions such as AI-enabled coding, real-time payer and provider interfaces, and clinical quality and safety support.

Client feedback has been positive and focused on how greater transparency and clinical alignment address challenges and shift the conversation to affordable health outcomes.

Client feedback has been positive and focused on how greater transparency and clinical life have been addressed and challenges, shifting the conversation to affordable health outcomes.

Client feedback has been positive and focused on how greater transparency and clinical alignment can address challenges. Shifting the conversation to affordable health outcomes.

Client feedback has been positive and focused on how greater transparency and clinical alignment can address and challenge shifting the conversation to affordable health outcomes.

Versus economic period.

This all Builds on our industry-leading. Commitment last year to pass through 100% of manufacturer rebates, customers by the end of 2027,

This all Builds on our industry-leading. Commitment last year to pass through 100% of manufacturer. Rebates, customers by the end of 2027,

This all builds on our industry-leading commitment last year to pass through 100% of manufacturer rebates to customers by the end of 2027.

Speaker #2: These products are driving real impact for customers, making healthcare simpler, faster, better, and more affordable. For example, Value Connect is an AI-driven insights platform integrated into provider workflows and electronic health records to improve value-based care performance.

We are well on our way, as we expect in 2026 to have more than 95% of clients.

We are well on our way, as we expect in 2026 to have more than 95% of the clients.

We are well on our way, as we expect in 2026 to have more than 95% of clients.

On 100% passive.

Moving documents.

AI-enabled approaches continue to gain traction as more payer and provider customers see differentiated capability to drive better performance.

AI-enabled approaches continue to gain traction, as more payer and provider customers see differentiated capability to drive better performance.

AI-enabled approaches continue to contract as more prepare and provider customers. We see differentiated capability to drive better performance.

AI-enabled approaches continue to interact with more payer and provider customers. We see differentiated capabilities to drive better performance.

Speaker #2: Early client results include a 17% reduction in pharmacy costs. Bringing this all together halfway through the year, we have made steady progress in each of our Optum businesses, and will continue to find ways to better serve patients, providers, and customers.

The emerging Suite of products includes Solutions. Such as Ai and making coding, real time, mayor provider interfaces and clinical quality and safety support

The emerging Suite of products includes Solutions. Such as Ai and coding. Real time, mayor provider interfaces and clinical quality and safety support

Speaker #2: I'll now turn it over to Wayne DeVite.

These products are driving real impact to customers making Health Care, simpler faster, better and more accurate.

Speaker #2: For example, we value connections in AI-driven insights platforms integrated into provider workflows and electronic health records to improve value-based care performance. Early client results include a 17% reduction in pharmacy costs.

these products are driving real impact to customers making Health Care, simpler faster, better and more accurate.

These products are driving real impact for customers, making health care simpler, faster, better, and more accurate.

Speaker #3: Thank you, Patrick, and good morning, everyone. I will briefly review second quarter results. Then discuss expectations for the remainder of the year, as we refresh our 2026 guidance.

For example, value protection, and AI, for an Insight platform integrates with the provider workflows, and electrical health records to improve valuable care performance.

For example, value protection, and AI to an Insight platform integrates with the provider workflows, and electrical health records to improve valuable care performance.

For example, value taxes and AI to an Insight platform integrates with the provider workflows and electronic health records, to improve value care performance.

For example, value taxes and AI to an insight platform integrates with the provider workflows and electronic health records to improve value for care performance.

Speaker #3: Overall, the quarter and full year outlook reflect improved performance across our businesses, with notable improvements in UnitedHealthcare, and Optum Health. UnitedHealth Group reported adjusted earnings per share of $6.38, compared to $4.08 in the prior year.

Speaker #2: Bringing this all together, halfway through the year we have made steady progress in each of our Optum businesses, and will continue to find ways.

Early client results. Include a 70% reduction in farming costs.

Early client results include a 70% reduction in farming costs.

Early client results include a 74% reduction in farming costs.

Speaker #3: Total revenues were $112 billion, largely consistent with the prior year, while operating earnings of $8 billion grew 55% year over year. This improvement reflects product and portfolio actions taken over the past 12 months, along with more focused and consistent management disciplines.

Wayne DeVeydt: 2026 guidance. Overall, the quarter and full-year outlook reflect improved performance across our businesses, with notable improvements in UnitedHealthcare and Optum Health. UnitedHealth Group reported adjusted earnings per share of $6.38 compared to $4.08 in the prior year. Total revenues were $112 billion, largely consistent with the prior year, while operating earnings of $8 billion grew 55% year over year. This improvement reflects product and portfolio actions taken over the past 12 months, along with more focused and consistent management disciplines. Turning to medical costs. Our reported medical care ratio of 86.7% includes $860 million of net favorable prior period medical development, the majority of which is in-year development. This compares to 89.4% in Q2 2025. Days claims payable was 47 days, up approximately 2.5 days from a year ago. The operating cost ratio was 12.7% for the quarter compared to 12.3% a year ago.

Wayne DeVeydt: Overall, the quarter and full-year outlook reflect improved performance across our businesses, with notable improvements in UnitedHealthcare and Optum Health. UnitedHealth Group reported adjusted earnings per share of $6.38 compared to $4.08 in the prior year. Total revenues were $112 billion, largely consistent with the prior year, while operating earnings of $8 billion grew 55% year-over-year. This improvement reflects product and portfolio actions taken over the past 12 months, along with more focused and consistent management disciplines. Turning to medical costs. Our reported medical care ratio of 86.7% includes $860 million of net favorable prior period medical development, the majority of which is in-year development. This compares to 89.4% in Q2 2025. Days claims payable was 47 days, up approximately 2.5 days from a year ago.

Speaker #3: Turning to medical costs. Our reported medical care ratio of 86.7% includes 860 million of net favorable prior period medical development. The majority of which is in-year development.

Speaker #3: This compares to 89.4% in two Q 2025. Today's claims payable was $47 days, up approximately 2.5 days from a year ago. The operating cost ratio was 12.7% for the quarter, compared to 12.3% a year ago, as we continue to focus on operating discipline while making targeted investments across technology, AI, care delivery enhancements, customer experience, and advance in healthier communities through the UnitedHealth Foundation.

Our reported Medical Care Ratio of 86.7% includes $860 million of net favorable prior period medical development.

The majority of which is in-ear development.

Speaker #3: Moving to cash flows in our balance sheet. Operating cash flows in the quarter were approximately $11 billion, or $1.9 times net income. Reflecting timing of substantial government payments and strong earnings.

This compares to 89.4% in Q2 2025.

Days claims payable was 47 days, up approximately 2.5 days from a year ago.

Wayne DeVeydt: The operating cost ratio was 12.7% for the quarter compared to 12.3% a year ago. As we continue to focus on operating discipline while making targeted investments across technology, AI, care delivery enhancements, customer experience, and advancing healthier communities through the United Health Foundation. Moving to cash flows and our balance sheet. Operating cash flows in the quarter were approximately $11 billion or 1.9x net income, reflecting timing of substantial government payments and strong earnings. This provides capital to strengthen the balance sheet, invest in growth, and return value to shareholders. Through mid-July, we have deployed $4 billion for repurchases of 11.4 million shares.

Speaker #3: This provides capital to strengthen the balance sheet invest in growth, and return value to shareholders. Through mid-July, we have deployed $4 billion for repurchases of $11.4 million shares.

Wayne DeVeydt: As we continue to focus on operating discipline while making targeted investments across technology, AI, care delivery enhancements, customer experience, and advancing healthier communities through the United Health Foundation. Moving to cash flows and our balance sheet. Operating cash flows in the quarter were approximately $11 billion or 1.9 times net income, reflecting timing of substantial government payments and strong earnings. This provides capital to strengthen the balance sheet, invest in growth, and return value to shareholders. Through mid-July, we have deployed $4 billion for repurchases of 11.4 million shares. We now expect to complete total share repurchases of at least $5 billion in 2026, compared to initial guidance of $2.5 billion. During the quarter, we returned $2.1 billion to shareholders through our dividend, which our board increased to $9.28 per share on an annualized basis. Lastly, on 2 July, we successfully closed the previously announced combination with Alegeus.

Speaker #3: We now expect to complete total share repurchases of at least $5 billion in 2026, compared to initial guidance of $2.5 billion. During the quarter, we returned $2.1 billion to shareholders through our dividend, which our board increased to $9.28 per share on an annualized basis.

The operating cost ratio was 12.7% for the quarter, compared to 12.3% a year ago, as we continue to focus on operating discipline, while making targeted investments across technology, AI care, delivery enhancements, customer experience, and advancing healthier communities through the United Health Foundation.

Moving to cash flows in our balance sheet.

Operating cash flows in the quarter were approximately $11 billion, or 1.9 times net income.

Reflecting the timing of substantial government payments and strong earnings.

Speaker #3: And lastly, on July 2nd, we successfully closed the previously announced combination with Allegias. Our debt-to-capital ratio was 41.2% at the end of the quarter, compared to 44.1% one year ago, and $170 basis points sequential improvement from the first quarter of this year.

This provides capital to strengthen the balance sheet, invest in growth, and return value to shareholders.

Through mid-July, we have deployed $4 billion for repurchases of 11.4 million shares.

Wayne DeVeydt: We now expect to complete total share repurchases of at least $5 billion in 2026, compared to initial guidance of $2.5 billion. During the quarter, we returned $2.1 billion to shareholders through our dividend, which our board increased to $9.28 per share on an annualized basis. Lastly, on 2 July, we successfully closed the previously announced combination with Alegeus. Our debt to capital ratio was 41.2% at the end of the quarter compared to 44.1% one year ago, and 170 basis point sequential improvement from Q1 of this year. We remain on track to reduce our debt to capital ratio to approximately 40% by the end of 2026.

Speaker #3: We remain on track to reduce our debt-to-capital ratio to approximately 40% by the end of 2026. As you saw earlier this morning, we have updated our full year 2026 guidance to reflect performance through the first half of the year, and a more mature understanding of expected membership mix, and utilization patterns for the remaining six months.

We now expect to complete total share repurchases of at least 5 billion in 2026 compared to initial guidance of 2.5 billion.

During the quarter, we returned $2.1 billion to shareholders through our dividend, which our board increased to $9.28 per share on an annualized basis.

And lastly, on July 2nd, we successfully closed the previously announced combination with Alleges.

Wayne DeVeydt: Our debt to capital ratio was 41.2% at the end of the quarter compared to 44.1% one year ago, and 170 basis point sequential improvement from Q1 of this year. We remain on track to reduce our debt to capital ratio to approximately 40% by the end of 2026. As you saw earlier this morning, we have updated our full year 2026 guidance to reflect performance through H1 of the year and a more mature understanding of expected membership mix and utilization patterns for the remaining six months. We continue to be respectful of medical trend, and we believe this refreshed outlook appropriately balances risk and investments with durable run rate earnings. A few areas of this outlook to highlight. We're providing new adjusted earnings per share guidance range of $19.50 to $20, with slightly more earnings in Q3 relative to Q4.

Speaker #3: We continue to be respectful of medical trend, and we believe this refreshed outlook appropriately balances risk and investments with durable run-rate earnings. A few areas of this outlook to highlight.

Our debt to Capital ratio was 41.2% at the end of the quarter compared to 44.1% 1 year ago and 170 basis points, sequential improvement from the first quarter of this year.

Speaker #3: We're providing new adjusted earnings per share guidance range of $1,950 to $20, with slightly more earnings in three Q relative to four Q. We are increasing the full year operating earnings outlook for UnitedHealthcare to at least $12 billion, and for Optum Health to at least $2.2 billion.

We remain on track to reduce our debt-to-capital ratio to approximately 40% by the end of 2026.

Wayne DeVeydt: As you saw earlier this morning, we have updated our full year 2026 guidance to reflect performance through H1 of the year and a more mature understanding of expected membership mix and utilization patterns for the remaining six months. We continue to be respectful of medical trend, and we believe this refreshed outlook appropriately balances risk and investments with durable run rate earnings. A few areas of this outlook to highlight. We're providing new adjusted earnings per share guidance range of $19.50 to $20, with slightly more earnings in Q3 relative to Q4. We are increasing the full-year operating earnings outlook for UnitedHealthcare to at least $12 billion and for Optum Health to at least $2.2 billion. These changes reflect operational improvement underway across the enterprise. We now expect a full-year medical care ratio of 88.1% ±25 basis points.

Speaker #3: These changes reflect operational improvement underway across the enterprise. We now expect a full year medical care ratio of 88.1%, plus or minus 25 basis points.

As you saw earlier this morning, we have updated our full-year 2026 guidance to reflect performance through the first half of the year and a more mature understanding of expected membership, mix, and utilization patterns for the remaining six months.

We continue to be respectful of medical trend, and we believe this refreshed outlook appropriately balances risk and investments with durable, run-rate earnings.

Speaker #3: We expect the operating cost ratio to come in at the higher end of our previously discussed range as a result of investments in our people, communities, and AI.

A few areas of this outlook to highlight.

We're providing new adjusted earnings per share guidance, a range of $19.50 to $20.00, with slightly more earnings in Q3 relative to Q4.

Speaker #3: The overall earnings cadence for the year remains consistent with prior expectations, UnitedHealthcare earnings continue to be weighted approximately 75% to the first half of the year.

Wayne DeVeydt: We are increasing the full-year operating earnings outlook for UnitedHealthcare to at least $12 billion and for Optum Health to at least $2.2 billion. These changes reflect operational improvement underway across the enterprise. We now expect a full-year medical care ratio of 88.1% ±25 basis points. We expect the operating cost ratio to come in at the higher end of our previously discussed range as a result of investments in our people, communities, and AI. The overall earnings cadence for the year remains consistent with prior expectations. UnitedHealthcare earnings continue to be weighted approximately 75% to H1 of the year. Similarly, we expect nearly all of Optum Health's earnings to be recognized in H1, with modest profit in Q3 offset by modest losses in Q4 due to the seasonality of the risk-based businesses.

We are increasing the 4-year operating earnings outlook for UnitedHealthcare to at least $12 billion, and for Optum Health to at least $2.2 billion.

Speaker #3: Similarly, we expect nearly all of Optum Health's earnings to be recognized in the first half, with modest profit in three Q, offset by modest losses in the fourth quarter.

These changes reflect operational improvement underway across the enterprise.

Speaker #3: Due to the seasonality of the risk-based businesses. In contrast, Optum Insight and Optum Rx remain more heavily weighted towards the second half of the year.

We now expect a full-year medical care ratio of 88.1%, plus or minus 25 basis points.

Wayne DeVeydt: We expect the operating cost ratio to come in at the higher end of our previously discussed range as a result of investments in our people, communities, and AI. The overall earnings cadence for the year remains consistent with prior expectations. UnitedHealthcare earnings continue to be weighted approximately 75% to H1 of the year. Similarly, we expect nearly all of Optum Health's earnings to be recognized in H1, with modest profit in Q3 offset by modest losses in Q4 due to the seasonality of the risk-based businesses.

Speaker #3: With each expected to generate approximately $55% of their full year earnings during the back half, as client implementations growth investments and normal business seasonality progress through the year.

We expect the operating cost ratio to come in at the higher end of our previously discussed range as a result of investments in our people, communities, and AI.

The overall earnings cadence for the year remains consistent with prior expectations.

Speaker #3: So overall, we're seeing a two-thirds, one-third first half to back half mix. Steve, back to you.

UnitedHealthcare earnings continue to be weighted approximately 75% to the first half of the year.

Speaker #2: Thanks, Wayne. Over the last few quarters, this enterprise has undertaken a broad-based effort to improve how consumers and care providers experience the health system.

Similarly, we expect nearly all of Optum Health earnings to be recognized in the first half, with modest profit in Q3 offset by modest losses in the fourth quarter, due to the seasonality of the risk-based businesses.

Wayne DeVeydt: In contrast, Optum Insight and Optum Rx remain more heavily weighted towards H2 of the year, with each expected to generate approximately 55% of their full-year earnings during the H2 as client implementations, growth investments, and normal business seasonality progress through the year. Overall, we're seeing a two-thirds, one-third H1 to H2 mix. Steve, back to you.

Speaker #2: While addressing the chronic cost trends trend issues driving the everyday challenges of access, affordability, and complexity. Our press release this morning has a sampling of these initiatives.

Speaker #2: Our efforts focus on essential themes affordability, transparency, modernization, simplicity, and convenience. As the US health system continues to evolve, we will evolve our approaches and our businesses as a scaled and diverse enterprise.

In contrast, Optum Insight and OptumRx remain more heavily weighted towards the second half of the year, with each expected to generate approximately 55% of their full-year earnings during the back half, as client implementations, growth, investments, and normal business seasonality progress through the year.

So overall, we're seeing a two-thirds/one-third first half to back half next.

Stephen Hemsley: Thanks, Wayne. Over the last few quarters, this enterprise has undertaken a broad-based effort to improve how consumers and care providers experience the health system while addressing the chronic cost trend issues driving the everyday challenges of access, affordability, and complexity. Our press release this morning has a sampling of these initiatives. Our efforts focus on essential themes: affordability, transparency, modernization, simplicity, and convenience. As the US health system continues to evolve, we will evolve our approaches and our businesses as a scaled and diverse enterprise, driving integrated value-based care anchored in the first principles of the right care, at the right time, and in the right setting. A system where incentives are aligned to those first principles and the better health and the better cost trends they drive.

Steve Hemsley: Thanks, Wayne. Over the last few quarters, this enterprise has undertaken a broad-based effort to improve how consumers and care providers experience the health system while addressing the chronic cost trend issues driving the everyday challenges of access, affordability, and complexity. Our press release this morning has a sampling of these initiatives. Our efforts focus on essential themes: affordability, transparency, modernization, simplicity, and convenience. As the US health system continues to evolve, we will evolve our approaches and our businesses as a scaled and diverse enterprise, driving integrated value-based care anchored in the first principles of the right care, at the right time, and in the right setting. A system where incentives are aligned to those first principles and the better health and the better cost trends they drive.

Steve, back to you. Thanks, Wayne.

Over the last few quarters, this enterprise has undertaken a broad-based effort.

To improve how consumers and care providers experience the health system.

Speaker #2: Driving integrated value-based care anchored in the first principles of the right care, at the right time, and in the right setting. A system where incentives are aligned to those first principles and the better health and the better cost trends that drive.

Issues driving the everyday challenges of access.

Affordability and complexity.

A press release this morning has a sampling of these initiatives.

Speaker #2: Value-based care approaches are a key component of the effort to make health care more affordable by bending the cost trend, by better aligning incentives for both consumers and care providers.

Our efforts focus on essential themes: affordability, transparency, modernization, simplicity, and convenience.

Speaker #2: Artificial intelligence technologies applied in practical ways that help people can be an accelerator to achieving that goal as we use them to literally reimagine our enterprise.

As the U.S. health system continues to evolve, we will evolve our approaches and our businesses as a scaled and diverse enterprise.

Driving integrated value-based care anchored in the first principles of the right care at the right time, and in the right setting.

Speaker #2: You should expect us to continue along that path, and pick a momentum as we better fulfill our mission with accountability to you, and all stakeholders in the health system.

A system where incentives are aligned to those first principles, and the better health and better cost trends that drive.

Stephen Hemsley: Value-based care approaches are a key component of the effort to make healthcare more affordable by bending the cost trend by better aligning incentives for both consumers and care providers. Artificial intelligence technologies applied in practical ways that help people can be an accelerator to achieving that goal as we use them to literally reimagine our enterprise. You should expect us to continue along that path and pick up momentum as we better fulfill our mission with accountability to you and all stakeholders in the health system. Now we'll go to questions. Thank you, operator.

Steve Hemsley: Value-based care approaches are a key component of the effort to make healthcare more affordable by bending the cost trend by better aligning incentives for both consumers and care providers. Artificial intelligence technologies applied in practical ways that help people can be an accelerator to achieving that goal as we use them to literally reimagine our enterprise. You should expect us to continue along that path and pick up momentum as we better fulfill our mission with accountability to you and all stakeholders in the health system. Now we'll go to questions. Thank you, operator.

Speaker #2: Now we'll go to questions. Thank you, operator.

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.

Value-based care approaches are a key component of the effort to make health care more affordable by bending the cost trend.

By better aligning incentives for both consumers and care providers.

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.

Artificial intelligence technologies applied in practical ways that help people.

Speaker #1: If you ask multiple questions, we will only be answering the first question, so that we can respond to everyone in the queue this morning.

They can be an accelerator to achieving that goal, as we use them to literally reimagine our enterprise.

Speaker #1: And we'll take our first question from Justin Lake with research.

You should expect us to continue along that path and pick up momentum, as we better fulfill our mission with accountability to you and all stakeholders in the health system.

Speaker #4: Thanks. Good morning. Just wanted to touch on a couple of numbers. First, on Medicaid, you had talked to minus 1.1% to minus 1.7% margin, previously curious sounds like you're seeing some improvement there.

Now, we'll go to questions. Thank you, operator.

Operator: 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. 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 that we can respond to everyone in the queue this morning. We'll take our first question from Justin Lake with Wolfe Research.

Operator: The floor is now open for questions. At this time, if you have a question or comment, please press *1 on your touch tone phone. You may remove yourself from the queue by pressing *2 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 that we can respond to everyone in the queue this morning. We'll take our first question from Justin Lake with Wolfe Research.

The floor is now open for questions.

Ask a question or

please press star.

Speaker #4: Maybe you can give us some color on what you expect the year to end up. And then on commercial, can you talk about the magnitude of the cost trend pressure you're seeing here versus that 11% expectations and maybe commercial margins this year, and the trajectory versus the previous assumption?

You may remove yourself from the queue by pressing star 2 on your touchtone phone. We ask you to limit yourself to one question. If you ask multiple questions, we will only answer the first question so that we can respond to everyone in the queue this morning.

And we'll take our first question from Justin Lake.

With research.

Justin Lake: Thanks. Good morning. Just wanted to touch on a couple of numbers. First, on Medicaid, you had talked to, -1.1%, a -1.7% margin previously. Curious, sounds like you're seeing some improvement there. Maybe you can give us some color on what you expect the year to end up. Then on commercial, can you talk about the magnitude of the cost trend pressure you're seeing here versus that 11% expectations? Maybe update us on how we should think about commercial margins this year and the trajectory versus the previous assumption. I think you assumed you were going to get back to target in 2027. Thanks.

Thanks, good morning.

Speaker #4: I think you assumed you were going to get back to target in 2027. Thanks.

Speaker #2: Sure. Thanks, Justin. Mike, do you want to take the first one? Medicaid?

Speaker #5: Thanks, Justin. Yes. Our Q2 Medicaid performance was in line with expectations. The first half of the year has benefited from execution on affordability actions, including network curations, payment integrity actions, fraud, waste, and abuse.

Speaker #5: And identification of operating cost disciplines. Trend remains elevated versus pre-pandemic levels, but stable with continued pressure, and especially pharmacy home and community-based services and behavioral health care services.

Stephen Hemsley: Sure. Thanks, Justin. Mike, do you want to take the first one, Medicaid?

Steve Hemsley: Sure. Thanks, Justin. Mike, do you want to take the first one, Medicaid?

Just wanted to touch on a couple of numbers. First, on Medicaid, you talked to, uh, minus 1.1%. I might as well 1.7% margin previously—curious, uh, sounds like you're seeing some improvement there. Maybe you can give us some color on what you expect the year to end up at. And on Commercial, can you talk about the magnitude of the cost trend pressure you're seeing here versus the 11% expectations? And maybe update us on how we should think about commercial margins this year and the trajectory versus the previous assumption. I think you assumed you were going to get back to target in 2027. Thanks.

Speaker #5: We're also seeing a bit of an increase in trend in inpatient and sniff costs as well for a complex population. On an aggregate year-to-date rate actions through '71 accounting for approximately 80% of our annual revenue, we're within our expected forecast.

Sure, thanks, Justin. Uh, Mike, do you want to take the first one? Medic, A.

Mike Cotton: Thanks, Justin. Yes, our Q2 Medicaid performance was in line with expectations. The H1 of the year has benefited from execution on affordability actions, including network curations, payment integrity actions, fraud, waste, and abuse, and identification of operating cost disciplines. Trend remains elevated, versus pre-pandemic levels, but stable with continued pressure in specialty pharmacy, home and community-based services, and behavioral healthcare services. We're also seeing a bit of an increase in trend in inpatient SNF costs as well for our complex populations. On an aggregate year-to-date rate actions to 1 July accounting for approximately 80% of our annual revenue, we're within our expected forecast. We continue to work with our state partners on on-cycle and off-cycle rate actions and are in active conversations for our 1 September and 1 October rates.

Speaker #5: We continue to work with our state partners on on-cycle and off-cycle rate actions, and our inactive conversations for our 901 and 101 rates. We continue to believe annualized 2026 rate impacts will be in the zone of around 6% to 7%, and still lagging elevated medical trend.

Speaker #5: Overall, our 26 margins will be within our previously communicated range as you've indicated, negative one to negative 1.7%, and we expect to hit that expectation for the year.

Uh thanks Justin. Uh yes our our Q2 Medicaid performance was in line with expectations. Um, the first half of the year has benefited from execution on affordability actions including network curations. Uh, payment Integrity actions fraud waste and abuse and identification of operating costs disciplines, uh, Trend remains elevated, uh, versus pre-pandemic levels. But stable with continued, pressure and Specialty, Pharmacy, Home and Community Based Services and Behavioral Healthcare Services. We're also seeing a bit of a increase in uh, Trend and inpatient and sniff costs as well for our complex. Populations,

Speaker #5: Thank you for the question.

Speaker #2: Thanks, Mike. Dan Keter, do you want to comment on commercial?

Speaker #6: Yeah. Thanks, Steve. Hi, Justin. Thanks for the question. Let me unpack a little bit for you what's going on in commercial businesses. Obviously, trend and margin are tied together.

Mike Cotton: We continue to believe annualized 2026 rate impact will be in the zone of around 6% to 7% and still lagging elevated medical trend. Overall, our 2026 margins will be within our previously communicated range, as you've indicated, -1% to -1.7%, and we expect to hit that expectation for the year. Thank you for the question.

Speaker #6: I think it's pretty straightforward. First on trend, modestly above 11% that we were expecting as Tim shared. There are multiple drivers. First, the ineffective IDR process that's associated with the no surprises act is being exploited by select providers and select geographies.

Speaker #6: It's contributing 50 basis points or so of incremental trend in 2026, now totaling at least 100 basis points of total cost. Additionally, provider coding intensity with office visits, emergency departments, and selective other care sites being the primary drivers is also contributing incremental trend to last year and to our expectations.

Stephen Hemsley: Thanks, Mike. Dan Schumacher, do you want to comment on Commercial?

Steve Hemsley: Thanks, Mike. Dan Kueter, do you want to comment on Commercial?

Dan Schumacher: Yeah. Thanks, Steve. Hi, Justin. Thanks for the question. Let me unpack a little bit for you what's going on in Commercial business, as obviously trend and margin are tied together. I think it's pretty straightforward. First, on trend, modestly above 11% that we were expecting, as Tim shared. There are multiple drivers. First, the ineffective IDR process that's associated with the No Surprises Act is being exploited by select providers in select geographies. It's contributing 50 basis points or so of incremental trend in 2026, now totaling at least 100 basis points of total cost. Additionally, provider coding intensity with office visits, emergency departments, and selective other care sites being the primary drivers is also contributing incremental trend to last year and to our expectations. Some consistent drivers continue to be pharmacy costs. I'd highlight specialty drugs reflecting both higher net costs and growth of newly covered indications.

Dan Kueter: Yeah. Thanks, Steve. Hi, Justin. Thanks for the question. Let me unpack a little bit for you what's going on in Commercial business, as obviously trend and margin are tied together. I think it's pretty straightforward. First, on trend, modestly above 11% that we were expecting, as Tim shared. There are multiple drivers. First, the ineffective IDR process that's associated with the No Surprises Act is being exploited by select providers in select geographies. It's contributing 50 basis points or so of incremental trend in 2026, now totaling at least 100 basis points of total cost.

Um, when an aggregate year to date rate actions through 71, accounting for Approximately 80% of our annual revenue, we're within our expected forecast. Uh, we continue to work with our state Partners on on cycle and off cycle rate, actions and are an active conversations for our 91 and 101 rates. Uh, we continue to believe annualized 2026. Rate impacts will be in the zone of around 6% to 7% and still lagging elevated. Medical Trend. Overall, our 26 margins will be within our previously communicated range as you've indicated negative, 1 to negative 1.7%, and we expect to hit that expectation for the year. Thank you for the question. Thanks Mike. Uh, Dan keter, do you want to comment on Commercial? Yeah, thanks Steve. Hi Justin, thanks for the question. Um, let me un

Speaker #6: Some consistent drivers continue to be pharmacy cost, I'd highlight specialty drugs, reflecting both higher net costs and growth of newly covered indications. Anti-inflammatory and GLP-1s are part of that mix as you would expect.

Speaker #6: And lastly, we're on the utilization and care patterns, we're not seeing any other areas of meaningful offset or pullback in those categories. So now the impact of that trend environment on our planning for margin expansion as you highlighted, and simply put, we're not yielding the full margin expansion for which we'd planned in 2026.

Dan Kueter: Additionally, provider coding intensity with office visits, emergency departments, and selective other care sites being the primary drivers is also contributing incremental trend to last year and to our expectations. Some consistent drivers continue to be pharmacy costs. I'd highlight specialty drugs reflecting both higher net costs and growth of newly covered indications. Anti-inflammatory and GLP-1s are part of that mix, as you would expect.

Let me unpack a little bit for you. What's going on in the commercial business is, obviously, trend and margin are tied together. I think it's pretty straightforward. First, on trend—modestly above the 11% that we were expecting, as Tim shared—there are multiple drivers. First, the ineffective IDR process that's associated with the No Surprises Act is being exploited by select providers in select geographies, and it's contributing 50 basis points or so of incremental trend in 2026, now totaling at least 100 basis points in total cost.

Speaker #6: I see 26 as a delay to that margin recovery trajectory. Not a setback. So the sticky nature of the persistent and elevated trend is extending the timeframe for full margin recovery past 2027 as we've previously discussed and you highlighted.

Dan Schumacher: Anti-inflammatory and GLP-1s are part of that mix, as you would expect. Lastly, on the utilization and care patterns, we're not seeing any other areas of meaningful offset or pullback in those categories. Now the impact of that trend environment on our margins. We came into 2026 planning for margin expansion, as you highlighted, and simply put, we're not yielding the full margin expansion for which we'd planned in 2026. I see 2026 as a delay to that margin recovery trajectory, not a setback. The sticky nature of the persistent and elevated trend is extending the timeframe for full margin recovery past 2027, as we've previously discussed and you highlighted. We remain on a multi-year journey. We remain confident that that journey will result in a return to our historic margin performance of 7% or greater for the Commercial group business.

Dan Kueter: Lastly, on the utilization and care patterns, we're not seeing any other areas of meaningful offset or pullback in those categories. Now the impact of that trend environment on our margins. We came into 2026 planning for margin expansion, as you highlighted, and simply put, we're not yielding the full margin expansion for which we'd planned in 2026. I see 2026 as a delay to that margin recovery trajectory, not a setback. The sticky nature of the persistent and elevated trend is extending the timeframe for full margin recovery past 2027, as we've previously discussed and you highlighted. We remain on a multi-year journey. We remain confident that that journey will result in a return to our historic margin performance of 7% or greater for the Commercial group business.

Costs and uh growth of newly covered indications, anti-inflammatory and glp ones are part of that mix as you would expect. Uh and lastly we're on the on the utilization and Care patterns, we're not seeing any other areas of meaningful offset or pullback in those categories.

Speaker #6: We remain on a multi-year journey. We remain confident that that journey will result in a return to our historic margin performance of 7% or greater for the commercial group business.

So now, the impact of that trend environment on our margins,

Speaker #6: That performance is pacing and that recovery is built on a few things. Improved administrative cost efficiency, AI enhanced fraud, waste, and abuse efforts, and diligent focus as always on medical cost affordability.

We came into '26 planning for margin expansion, as you highlighted, and simply put, we're not yielding the full margin expansion for which we'd planned in 2026.

I see '26 as a delay to that margin recovery trajectory, not a setback.

Speaker #6: So thanks for the question, Justin.

Speaker #2: Thanks, Dan. It's an area we clearly focusing on going forward. Next question, please.

So, the sticky nature of the persistent and elevated trend is extending the time frame for full margin recovery past 2027, as we've previously discussed. And you highlighted—

Speaker #1: Our next question comes from AJ Rice with UBS.

We remain on a multi-year journey.

Speaker #3: Thanks. Hi, everybody. Obviously, the turnaround from a year ago when you came back, Steve, and restructured the team, has progressed very nicely. As you sort of assess here a year into all of this, maybe just broadly, where is the turnaround pretty much done?

We remain confident that that journey will result in a return to our historic margin performance of 7% or greater for the Commercial Group business.

Dan Schumacher: That performance is pacing, that recovery is built on a few things, improved administrative cost efficiency, AI enhanced fraud, waste, and abuse efforts, and diligent focus, as always, on medical cost affordability. Thanks for the question, Justin.

Dan Kueter: That performance is pacing, that recovery is built on a few things, improved administrative cost efficiency, AI enhanced fraud, waste, and abuse efforts, and diligent focus, as always, on medical cost affordability. Thanks for the question, Justin.

That performance is pacing, and that recovery is built on a few things: improved administrative cost efficiency.

AI-enhanced fraud, waste, and abuse efforts.

Stephen Hemsley: Thanks, Dan. That's an area we're clearly focusing on going forward. Next question, please.

Steve Hemsley: Thanks, Dan. That's an area we're clearly focusing on going forward. Next question, please.

Speaker #3: Where are there still, in your mind, opportunities? And because I have to ask you a numbers question, how about the thought of getting back to the 13 to 16% earnings growth trajectory?

And diligent focus, as always, on medical costs and affordability. So, thanks for the question. Thanks, Dan. It's an area we are clearly focusing on going forward. Next question, please.

Operator: Our next question comes from A.J. Rice with UBS.

Our next question comes from AJ Rice with UBS.

A.J. Rice: Thanks. Hi, everybody. Obviously, the turnaround from a year ago when you came back, Steve, and restructured the team has progressed very nicely. As you sort of assess here a year into all of this, maybe just broadly, where is the turnaround pretty much done? Where are there still, in your mind, opportunities? Because I have to ask you a numbers question, how about the thought of getting back to the 13% to 16% earnings growth trajectory? I know the goal had been to do that by 2028. Do you feel like you're going to do obviously better than that this year? Do you think you're on a sustainable track now to have that 13% to 16% growth going forward?

Uh, thanks. Hi everybody. Um,

Speaker #3: I know the goal had been to do that by 28. Do you feel like you're going to do obviously better than that this year?

Speaker #3: Do you think you're on a sustainable track now to have that 13 to 16% growth going forward?

Speaker #6: Yeah. I would say basically two things in that. I will say we'll probably never we'll remain restless. We are never going to not be in improvements and urgency mode.

Speaker #6: So I don't see this kind of approach really changing and I think everybody is aligned with that. And so we have a great deal of work to do in front of us.

Speaker #6: This is not just about returning to a growth rate. This is also about making this company perform in levels and in areas and spaces consistent with its mission and to really provide a positive impact to all those we serve and across the health system.

Obviously, uh, the turnaround, uh, from a year ago when you I came back, Steve and brought and restructured. The team, uh, has progressed very nicely. Um, as you sort of assess here a year into, um, all of this, maybe just broadly, where is the turnaround, you know, pretty much done, where are there still in your mind opportunities? And because I have to ask you a numbers question, how about, um, the thought of getting back to the 13 to 16%? Uh, earnings growth trajectory? I know the goal had been to do that by 28. Do you feel like you're going to do obviously better than that this year? You think you're on a track now to have that 13 to 16% growth going forward.

Stephen Hemsley: Yeah, I would say basically two things in that. I will say we'll probably We'll remain restless. We are never going to not be in improvement and urgency mode. I don't see this kind of approach really changing. I think everybody is aligned with that, and so we have a great deal of work to do in front of us. This is not just about returning to a growth rate. This is also about making this company perform in levels and in areas and spaces consistent with its mission, and to really provide a positive impact to all those we serve and across the health system. That broader mission is a restless one. It's a journey, and it's not going to stop. The second in terms of the growth rate, I don't ever believe I ever didn't believe in the 13% to 16% long-term growth rate.

Steve Hemsley: Yeah, I would say basically two things in that. I will say we'll probably We'll remain restless. We are never going to not be in improvement and urgency mode. I don't see this kind of approach really changing. I think everybody is aligned with that, and so we have a great deal of work to do in front of us. This is not just about returning to a growth rate. This is also about making this company perform in levels and in areas and spaces consistent with its mission, and to really provide a positive impact to all those we serve and across the health system. That broader mission is a restless one. It's a journey, and it's not going to stop. The second in terms of the growth rate, I don't ever believe I ever didn't believe in the 13% to 16% long-term growth rate.

Yeah, I would say basically two things in that, um, uh...

Speaker #6: So that broader mission is a restless one. It's a journey and it's not going to stop. The second in terms of the growth rate, I don't ever believe I ever didn't believe in the 13 to 16% long-term growth rate.

Uh, I will say we'll probably never, um, will remain restless. We are never going to not be in improvements. Um,

And urgency mode. So, I don't see this.

Speaker #6: We will have moments along the way when we don't perform to our potential. But if you take a look I think at this business approach and the challenges in the healthcare system, I think that we can grow in that growth rate, particularly recognize that it includes productivity gains and use of capital and if anything, those things have particularly on the technology side, the opportunities there are even more greater than they've been in the past.

Kind of approach really changing um and I think everybody is uh aligned with that and so we have a great deal of work to do in front of us. This is not just about returning to a growth rate. This is also about making this company perform in levels and in areas and spaces consistent with its Mission and

...to really provide a positive impact to all those we serve and across the health system. So that broader mission is a restless one—it's a journey, and it's not going to stop.

Uh, the second in terms of the growth rate, I—I don't ever believe I ever...

Stephen Hemsley: We will have moments along the way when we don't perform to our potential. If you take a look, I think, at this business approach and the challenges in the healthcare system, I think that we can grow in that growth rate, particularly recognize that it includes productivity gains and use of capital. If anything, those things have, particularly on the technology side, the opportunities there are even greater than they have been in the past. We continue to be in that mindset of that 13% to 16%. Definitely believe we can perform in that range. Really never believed otherwise. We did obviously have challenges in the last couple of years, but we are addressing those challenges and returning to form, and that's kind of the way we think of it. Is that enough a response?

Steve Hemsley: We will have moments along the way when we don't perform to our potential. If you take a look, I think, at this business approach and the challenges in the healthcare system, I think that we can grow in that growth rate, particularly recognize that it includes productivity gains and use of capital. If anything, those things have, particularly on the technology side, the opportunities there are even greater than they have been in the past. We continue to be in that mindset of that 13% to 16%. Definitely believe we can perform in that range. Really never believed otherwise. We did obviously have challenges in the last couple of years, but we are addressing those challenges and returning to form, and that's kind of the way we think of it. Is that enough a response?

Speaker #6: Perform to our potential. But if you take a look, I think, at this business approach and the challenges in the healthcare system, I think that we can particularly recognize that it includes productivity gains and use of capital. And if anything, those things—particularly on the technology side—the opportunities there are even greater than they've been in the past.

Speaker #6: So we continue to continue to be in that mindset of that 13 to 16%. Definitely believe we can perform in that range. Really never believed otherwise.

Speaker #6: We did obviously have challenges in the last couple of years, but we are addressing those challenges and returning to a form. And that's kind of the way we think of it is is that enough response?

Speaker #3: That's great. Thanks a lot.

Speaker #6: Okay. Thank you.

Speaker #2: Next question, please.

Speaker #6: So we continue to be in that mindset of that 13% to 16%. Definitely believe we can perform in that range. Really never believed otherwise.

Speaker #1: And we'll go next to Stephen Baxter with Wells Fargo.

Speaker #5: Yeah. Hi. Thanks. I wanted to ask about cost trend in the Medicare Advantage business. You bid for 2026 cost trends to be 100 basis points above 2025 level.

Speaker #6: We did, obviously, have challenges in the last couple of years, but we are addressing those challenges and returning to form. And that's kind of the way we think of it. Is that enough response?

Speaker #5: So I heard you in the prepared marks saying that trend is coming in kind of below where you bid to, but trying to understand where you see trend sitting versus 2025, at least in the first half of the year.

Speaker #5: And then just as we think about what you assumed in the bids that you finalized a month or so ago, was that closer to the first half experience for trend or something closer to what you saw in 2025 or expected to see, I guess, going into 2026?

Speaker #7: That's great. Thanks a lot.

A.J. Rice: That's great. Thanks a lot.

Speaker #6: Okay, thank you. Next question, please.

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

Steve Hemsley: Okay. Thank you. Next question, please.

Speaker #1: And we'll go next to Stephen Baxter with Wells Fargo.

Operator: We'll go next to Stephen Baxter with Wells Fargo.

Speaker #5: Yeah, hi, thanks. I wanted to ask about the cost trend in the Medicare Advantage business. You bid for 2026 cost trends to be 100 basis points above 2025 levels.

Stephen Baxter: Yeah. Hi, thanks. I wanted to ask about cost trend in the Medicare Advantage business. You bid for 2026 cost trends to be 100 basis points above 2025 levels. I heard you in the prepared remarks saying that trend is coming in below where you bid to, but trying to understand where you see trends sitting versus 2025, at least in the H1 of the year. Just as we think about what you assumed in the bids that you finalized a month or so ago, was that closer to the H1 experience for trend or something closer to what you saw in 2025 or expected to see, I guess, going into 2026? Thank you.

Speaker #5: Thank you.

Speaker #6: Thank you.

Speaker #2: Sure. Tim Knoll, can you come comment on that?

Speaker #7: Good morning, Stephen. Thanks for the question. So I'm going to just start off with just the high-level view kind of across UHC and then turn it over to Bobby for a little bit more supplemental detail on Medicare.

Speaker #5: So I heard you in the prepared marks saying that trend is coming in kind of below where you bid to, but I'm trying to understand where you see trend sitting versus 2025, at least in the first half of the year.

Speaker #7: So to start, trend remains very high across the board. Within UHC, all product lines, when you compare to historical levels. As you know, in our benefit planning, pricing, and forecasting, we broadly plan for a continuation of what we saw last year.

The trends sitting versus 2025, at least in the first half of the year. And then just as we think about, you know, what you assumed in the bids that you finalize, you know, a month or so ago. Was that closer to the first half experience for Trend or, uh, something closer to what you saw in 20125 or expected to see I guess going into 2026. Thank you.

Stephen Hemsley: Sure. Tim Noel, can you comment on that?

Steve Hemsley: Sure. Tim Noel, can you comment on that?

Tim Noel: Good morning, Stephen. Thanks for the question. I'm going to just start off with just the high level view kind of across UHC and then turn it over to Bobby for a little bit more supplemental detail on Medicare. To start, trend remains very high across the board within UHC all product lines when you compare to historical levels. As you know, in our benefit planning, pricing, and forecasting, we broadly plan for a continuation of what we saw last year. As noted in my opening remarks, how this is playing out across the businesses is a little different when you think about commercial Medicare and Medicaid. Dan highlighted some of the drivers leading us modestly above the 11% we're seeing there. Medicaid, again, largely in line with expectations. For Medicare, trend is coming in lower than our planning assumptions.

Speaker #7: And as noted in my opening remarks, how this is playing out across the businesses is a little different when you think about commercial Medicare and Medicaid.

Speaker #7: Dan highlighted some of the drivers leading us modestly above the 11% we're seeing there. Medicaid, again, largely in line with expectations. And for Medicare, trend is coming in lower than our planning assumptions.

Uh, sure. Tim know. Can you come comment on that? Yeah, good morning Stephen. Uh, thanks for the question. So I'm I'm gonna just start off with just the high level, um, View kind of a cross UHC. And then turn it over to Bobby for a little bit more supplemental detail on Medicare. So, to start Trend remains very high across the board, um, within UHC, all product lines when you compared to historical levels,

Speaker #7: However, it's really important to note this does not represent an inflection point in trend. We're continuing at those high levels, but it's coming in lower than our benefit planning assumptions.

Speaker #7: One of the key points before turning over to Bobby that I wanted to raise is on our exchange business, our exchange business is coming in better than our planning expectations as well.

Speaker #7: However, it has no financial impact inside of the quarter or the full year because we've made the pledge to return our profits to consumers.

Tim Noel: However, it's really important to note this does not represent an inflection point in trend. We're continuing at those high levels, but it's coming in lower than our benefit planning assumptions. One other key point before turning over to Bobby that I wanted to raise is on our exchange business. Our exchange business is coming in better than our planning expectations as well. However, it has no financial impact inside of the quarter or the full year because we've made the pledge to return our profits to consumers for 2026. That is separate from the commercial trends that we've been talking about of the greater than the 11% that we historically have been guiding to. With that, I'll just turn it over to Bobby for some detail and color on Medicare.

Speaker #7: For 2026. But that is separate from the commercial trends that we've been talking about of the greater than the 11% that we historically had been guiding to.

Um, as you know, in our benefit planning, pricing, and forecasting, we broadly planned for a continuation of what we saw last year. Um, and as noted in my opening remarks, how this is playing out across the businesses is a little different. Um, when you think about commercial, Medicare, and Medicaid—Dan highlighted some of the drivers leading us modestly above the 11% we're seeing there. Um, Medicaid, again, is largely in line with expectations, um, and for Medicare, trend is coming in lower than our planning assumptions. However, it's really important to note, this does not represent an inflection point in trend or a continuation of those high levels.

Speaker #7: So with that, I'll just turn it over to Bobby for some detail and caller on Medicare.

Speaker #2: Yeah. All right. Thanks, Stephen. So maybe to go one click deeper on the Medicare piece. So important to remember how we built up the 2026 medical trend, Stephen.

Speaker #2: I'll maybe frame it in three ways for you. First, we saw an elevated levels of core utilization in '25. We talked a lot about that.

Speaker #2: And we assumed that that would continue into 2026. That was kind of the foundation. Second, we adjusted for known year-over-year increases and things like the fee schedules, changes in calendar impacts.

Speaker #2: And then third, we accommodated for some level of potential unknown risk elements. So we've mentioned tariffs and other things of that nature. Now, there are a few things I'd point to in terms of why trends to date are a bit lower than our original expectation.

[Company Representative] (UnitedHealth Group): Yeah. All right. Thanks, Stephen. Maybe to go one click deeper on the Medicare piece. Important to remember how we built up the 2026 medical trend, Stephen. I'll maybe frame it in three ways for you. First, we saw elevated levels of core utilization in 2025. We talked a lot about that, and we assumed that that would continue into 2026. That was kind of the foundation. Second, we adjusted for known year-over-year increases in things like the fee schedule changes and calendar impacts. Third, we accommodated for some level of potential unknown risk elements. We've mentioned tariffs and other things of that nature. Now, there are a few things I'd point to in terms of why trends to date are a bit lower than our original expectation.

Speaker #2: First, we've had some positive claims experience as well as in-ear benefit from things like the lighter food and respiratory season and winter storm impacts that Tim mentioned in the prepared remarks.

Um, but it's coming in lower than our our benefit planning assumptions 1, other key Point um, before turning over to Bobby that I wanted to raise is um, on our exchange business, our exchange business is, um, coming in better than our planning expectations as well. Um, however, it has no Financial impact inside of the quarter, or the full year, because we've made the pledge to return our profits to Consumers for 2026. But that is, um, separate, um, from the commercial trends that we've been talking about, um, of the, um, greater than the 11% that we historically had been, um, guiding to. Um, so with that, I'll just turn it over to Bobby for some detail and call her on Medicare. Yeah, all right. Thanks, Stephen. Um, so maybe if you go 1, quick deeper, uh, on the Medicare piece. So important to remember how we built up the 2026 medical Trend. Stephen, I'll maybe frame it in 3 ways for you. First, we saw elevated levels of core utilization in 25. We talked a lot about

Speaker #2: And we've also not seen the full emergence of material unknown elements at this stage. However, it's also really important to highlight that while medical trends remain high versus the historical levels the improvement we're seeing is also the result of targeted actions that we've taken.

That, and we assume that that would continue into 2026—that was kind of the foundation. Second, we adjusted for known year-over-year increases and things like the fee schedule changes and calendaring impacts. Um, and then third, we accommodated for some level of potential unknown risk elements. So, we've mentioned tariffs and other things of that nature.

Speaker #2: And we've done that through benefit design, product positioning, that's resulted in a more favorable membership mix, we've had network curation activities focused on high-quality low-cost opportunities with providers for our membership.

[Company Representative] (UnitedHealth Group): First, we've had some positive claims experience as well as in-year benefit from things like the lighter flu and respiratory season and winter storm impacts that Tim mentioned in the prepared remarks. We've also not seen the full emergence of material unknown elements at this stage. However, it's also really important to highlight that while medical trends remain high versus the historical levels, the improvement we're seeing is also the result of targeted actions that we've taken, and we've done that through benefit design, product positioning that's resulted in a more favorable membership mix. We've had network curation activities focused on high quality, low cost, opportunities with providers for our membership. We've had broad affordability initiatives, and we continue to invest in aligned provider models like value-based care.

No, there are a few things I'd point to in terms of why trends to date are a bit lower than our original expectation. First, we've had some positive claims experience, as well as in-year benefit from things like the lighter flu and respiratory season, and winter storm impacts that Tim mentioned in the prepared remarks.

Speaker #2: We've had broad affordability initiatives and then we continue to invest in aligned provider models like value-based care. So overall, I feel good about our assumptions for '26 where we currently sit versus our expectations.

Speaker #2: And yet remain intensely focused on affordability given the still elevated levels of medical trend versus the historical baseline. And then to your question on '27, still probably a little bit too early to talk a lot.

Speaker #2: Specifics there, but at the highest level, we did plan reflective of our current experience with appropriate adjustments then for things like fee schedule updates and other natural year-over-year changes.

And we've also not seen the full emergence of material unknown elements at this stage. However, it's also really important to highlight that while medical trends remain high versus the historical levels, the improvement we're seeing is also the result of targeted actions that we've taken. And we've done that through benefit design and product positioning that's resulted in a more favorable membership mix.

Speaker #2: But foundationally, not expecting a meaningful deviation from the still elevated underlying core trends. Thanks for the question.

[Company Representative] (UnitedHealth Group): Overall, I feel good about our assumptions for 2026, where we currently sit versus our expectations, and yet remain intensely focused on affordability, given the still elevated levels of medical trend versus the historical baseline. To your question on 2027, still probably a little bit too early to talk a lot of specifics there. At the highest level, we did plan reflective of our current experience with appropriate adjustments then for things like fee schedule updates and other natural year-over-year changes. Foundationally, not expecting a meaningful deviation from the still elevated underlying core trends. Thanks for the question.

We've had network curation activities focused on high-quality, low-cost opportunities with providers for our membership. We've had broad affordability initiatives, and then we continue to invest in aligned provider models, like value-based care.

Speaker #7: Thank you. Next question.

Speaker #1: And we'll move to our next question from Kevin Fishbeck with Bank of America.

So overall, I feel good about our assumptions for '26 where we currently sit versus our expectations, and yet remain intensely focused on affordability, given the still elevated levels of medical trend versus the historical baseline.

Speaker #8: Great. Thanks. Maybe just kind of following back up on an earlier question about the growth rates. As we think about '13 to '16, it's kind of being, I guess, like a North Star growth rate for you guys.

Speaker #8: I mean, the outperformance this year was pretty dramatic. And just want to make sure that there's not something that we should be adjusting out of this baseline.

And then your question on 2027, uh, you know, still probably a little bit too early to talk a lot of specifics there. But at the highest level, we did plan reflective of our current experience with appropriate adjustments for things like e-schedule updates and other natural year-over-year changes. But foundationally, not expecting a meaningful deviation from the still elevated.

Speaker #8: Is this a good baseline to be thinking about for 2027 if you kind of assume normal growth from here or is there anything we should be thinking about either whether it was prior-peer development or outperformance that an MA that gets rebid to next year?

Underlying core trends. Thanks for the question.

Stephen Hemsley: Thank you. Next question.

Steve Hemsley: Thank you. Next question.

Thank you. Next question.

Operator: We'll move to our next question from Kevin Fischbeck with Bank of America.

And we'll move to our next question from Kevin Fishbach with Bank of America.

Kevin Fischbeck: Great. Thanks. Maybe just kind of following back up on an earlier question about the growth rates. As we think about 13% to 16% as kind of being, I guess, like a North Star growth rate for you guys, I mean, the outperformance this year is pretty dramatic. Just want to make sure that there's not something that we should be adjusting out of this baseline. Is this a good baseline to be thinking about for 2027 if we kind of assume normal growth from here, or is there anything we should be thinking about, either whether it was prior period development or outperformance that an MA that gets rebid to next year? How should we be thinking about that?

Speaker #8: How should we be thinking about that?

Speaker #2: Yeah. I think the quality of earnings is exceptional. Wayne, maybe you want to comment?

Great, thanks. Um, maybe just kind of following back up on an earlier question about, you know, the growth rates.

Speaker #9: Yeah. Good morning, Kevin. Let me start by saying I do think, as Steve highlighted, the earnings are quite durable. And we do think the 1950 to $20 is the right stepping-off point, albeit it reflects prior period development.

Speaker #9: We would say as well that, as Steve commented on the '13 to '16 percent growth algorithm, we personally have never deviated from. And we believe that is the right starting point as you think about our stepping-off point.

Baseline is—that's a good baseline to be thinking about for 2027. If you kind of assume normal growth from here, is there anything we should be thinking about—either whether it was prior period or outperformance, or an MA that gets rebid to next year? How should we be thinking about that?

Speaker #2: Next question, please.

Stephen Hemsley: I think the quality of earnings is exceptional. Wayne, maybe you want to comment?

Steve Hemsley: I think the quality of earnings is exceptional. Wayne, maybe you want to comment?

Speaker #1: And we'll go next to Lisa Gill with JPMorgan.

Wayne DeVeydt: Yeah. Good morning, Kevin. Let me start by saying I do think, as Steve highlighted, the earnings are quite durable, and we do think the $19.50 to $20 is the right stepping-off point, albeit it reflects prior period development. We would say as well that, as Steve commented on the 13% to 16% growth algorithm, we personally have never deviated from, and we believe that is the right starting point as you think about our stepping-off point.

Speaker #10: Thanks very much. Kind of following up on that question, throughout your prepared comments, you've talked about investment and spending, the SG&A. In the quarter, how much of that is potentially one-time and where you could see a benefit to that going into 2027?

Speaker #10: How should I think about the investments that you're making and the benefit that you could see? And again, to your point, Wayne, is there anything that's one-time in nature?

Yeah, I think the quality of earnings is, are is exceptional when maybe you want to comment? Yeah, good morning, Kevin. Um, let me start by saying, I do think is Steve highlighted, the earnings are quite durable, and we do think the 1950 to $20, is the right stepping off point, uh, albeit it reflects prior period development. Um, we would say as well that as Steve commented on the 13th to 16 percent growth algorithm, we personally have never deviated from and we believe that is the the right starting point. As you think about our stepping off point,

Stephen Hemsley: Next question, please.

Steve Hemsley: Next question, please.

Next question, please.

Operator: We'll go next to Lisa Gill with J.P. Morgan.

Speaker #9: Hey, Lisa. Good morning. Similar to the PPD, while that benefited us in one direction, we continue to invest in our foundation. Which you could argue is one-time.

And we'll go next to Lisa Gill with J.P. Morgan.

Lisa Gill: Thanks very much. Kind of following up on that question. Throughout your prepared comments, you've talked about investment spending, the SG&A up in the quarter. How much of that is potentially one time and where you could see a benefit to that going into 2027? How should I think about the investments that you're making and the benefits that you could see? Again, to your point, Wayne, is there anything that's one time in nature?

Speaker #9: We don't believe that's one-time, though. I think one of the things that we are targeting as a team is continuing to build that foundation out over time.

Speaker #9: We are now up to a billion dollars in the foundation, which is a very important part of our commitment to our communities. That being said, Lisa, we have a number of positive momentum items, but the durability of the underlying run rate is strong.

Uh, thanks very much kind of following up on that question, you know, throughout your prepared comments, you've talked about investment spending the sgna, um of uh in the quarter, how much of that is potentially 1 time and where you could see a benefit to that going into 2027? How should I think about the Investments that you're making and and the benefits that you could see and and again, you know, to your point, Wayne is there, is there anything that that's 1 time in nature?

Speaker #9: And you can see that in our cash flows. So I don't think there's anything you should be carving out in either direction. I think the 1950 to '20 is the right baseline.

Wayne DeVeydt: Hey, Lisa. Good morning. Similar to the PPD, while that benefited us in one direction, we continue to invest in our foundation, which you could argue is one time. We don't believe that's one time, though. I think one of the things that we are targeting as a team is continuing to build that foundation out over time. We are now up to $1 billion in the foundation, which is a very important part of our commitment to our communities. That being said, Lisa, we have a number of positive momentum items, the durability of the underlying run rate is strong, and you can see that in our cash flows. I don't think there's anything you should be carving out in either direction.

Speaker #9: And I think you should be thinking about the growth algorithm from that point forward. And I think as you heard, recovery on commercial is going to be a little bit longer than we had anticipated.

Speaker #9: But that should be a tailwind that we are reflecting in the future as well along with many of our other businesses that are still not at the optimal margins.

Hey Lisa, good morning. Um, similar to the PPD, while that benefited us in one direction, we continue to invest in our foundation, which you could argue is one time. We don't believe that's one time though. I think one of the things that we are targeting as a team is continuing to build that foundation out over time. Uh, we are now up to $1 billion in the foundation, which is a very important part of our commitment to our communities.

Speaker #2: Next question, please.

Speaker #1: And we'll take our next question from Andrew Mock with Barclays.

Speaker #11: Hi. Good morning. One of the follow-up on the commercial market comments, the IDR process has been in place for a number of years now.

Wayne DeVeydt: I think the $19.50 to $20 is the right baseline, and I think you should be thinking about the growth algorithm from that point forward. I think as you heard, recovery on commercial's going to be a little bit longer than we'd anticipated, but that should be a tailwind that we are reflecting in the future as well, along with many of our other businesses that are still not at the optimal margins.

Speaker #11: So can you help us understand why costs are accelerating now? Is that a function of win rates, dispute volume, or resolution timing? And is IDR something that you have confidence that you can price for or are there idiosyncratic considerations that make it harder to incorporate in pricing?

Um, that being said, Lisa, you know, we have a number of positive momentum items, but the durability of the underlying run rate is strong, and you can see that in our cash flows. So I don't think there's anything you should be carving out in either direction. I think the $19.50 to $20 is the right baseline, and I think you should be thinking about the growth algorithm from that point forward. And I think, as you heard, the recovery on commercials is going to be a little bit longer than we anticipated, but that should be a tailwind that we are reflecting in the future as well, along with many of our other businesses that are still not at the optimal margins.

Speaker #11: Thanks.

Stephen Hemsley: Next question, please.

Steve Hemsley: Next question, please.

Speaker #2: Dan.

Speaker #12: Hi, Andrew. Dan Keeter again. Thanks for the question. As I said earlier, the IDR process is part of the NSA is ineffective and we think there's multiple reasons behind it.

Next question, please.

Operator: We'll take our next question from Andrew Mok with Barclays.

And we'll take our next question from Andrew Mock with Baird.

Andrew Mok: Hi, good morning. Wanted to follow up on the commercial market comments. The IDR process has been in place for a number of years now, can you help us understand why costs are accelerating now? Is that a function of win rates, dispute volume, or resolution timing? Is IDR something that you have confidence that you can price for, or are there idiosyncratic considerations that make it harder to incorporate in pricing? Thanks.

Speaker #12: It has existed for some time, but it continues to accelerate in the volume of disputes and that has highlighted the deficiencies of the IDR process.

Speaker #12: Just a couple of things to point to. Upwards of 40% of all claims that enter the IDR process are ineligible for one reason or another.

Hi, good morning. Wanted to follow up on the commercial market comments. The IDR process has been in place for a number of years now. So, can you help us understand why costs are accelerating now? Is that a function of win rates, dispute volume, or resolution timing? And is IDR something that you have confidence you can price for, or are there idiosyncratic considerations that make it harder?

Order to incorporate in pricing. Thanks.

Stephen Hemsley: Dan.

Steve Hemsley: Dan.

Dan.

Dan Schumacher: Hi, Andrew. Dan Schumacher again. Thanks for the question. As I said earlier, the IDR process as part of the NSA is ineffective, and we think there's multiple reasons behind it. It has existed for some time, but it continues to accelerate in the volume of disputes, and that has highlighted the deficiencies of the IDR process. Just a couple of things to point to. Upwards of 40% of all claims that enter the IDR process are ineligible for one reason or another. As volume is increased, obviously this creates cost and delay for all involved. Roughly 60% of all arbitration cases are brought by one of just five entities. That, again, is a recent concentration of disputes in a narrow number of entities. That is different than it has been in the years past.

Dan Kueter: Hi, Andrew. Dan Schumacher again. Thanks for the question. As I said earlier, the IDR process as part of the NSA is ineffective, and we think there's multiple reasons behind it. It has existed for some time, but it continues to accelerate in the volume of disputes, and that has highlighted the deficiencies of the IDR process. Just a couple of things to point to. Upwards of 40% of all claims that enter the IDR process are ineligible for one reason or another. As volume is increased, obviously this creates cost and delay for all involved. Roughly 60% of all arbitration cases are brought by one of just five entities. That, again, is a recent concentration of disputes in a narrow number of entities. That is different than it has been in the years past.

Speaker #12: So as volume is increased, obviously this creates cost and delay for all involved. Roughly 60% of all arbitration cases are brought by one of just five entities.

Speaker #12: That again is a recent concentration of disputes in a narrow number of entities. That is different than it has been in the years past.

Speaker #12: And then I guess further evidence of the weaknesses of the IDR process and some of the things that continue to evolve making it dynamic and why it's changed from what it's been in the past.

Hi Andrew. Dan Keer again. Thanks for the question. Uh, as I said earlier, the IDR process, as part of the NSA, is ineffective, and we think there are multiple reasons behind it. Uh, it has existed for some time, but it continues to, uh, accelerate in the volume of disputes, and that has highlighted the deficiencies of the IDR process. Just a couple of things to point to—upwards of 40% of all claims that enter the IDR process are ineligible for one reason or another.

Speaker #12: The average payout from arbiters when they side with out-of-network providers is now 11 times what Medicare would pay. With some of those decisions ranging up to 30 times what Medicare would pay.

So, as volume is increased, obviously this creates cost and delay for all involved. Roughly 60% of all arbitration cases are brought by one of just five entities.

Speaker #12: So these numbers continue to evolve. They have accelerated. There are, of course, geographic variations to that as in certain states. Their process supersedes the federal process for insured business.

Uh, that again is a recent concentration of disputes in a narrow number of entities that is, uh, different than it has been in years past.

[Company Representative] (UnitedHealth Group): I guess further evidence of the weaknesses of the IDR process and some of the things that continue to evolve, making it dynamic and why it's changed from what it's been in the past, the average payout from arbiters, when they side with out-of-network providers, is now 11 times what Medicare would pay, with some of those decisions ranging up to 30 times what Medicare would pay. These numbers continue to evolve. They have accelerated. There are, of course, geographic variations to that, as in certain states, their process supersedes the federal process for insured business. It's variable across the country, but these trends in the aggregate apply

Speaker #12: So it's variable across the country, but these trends in the aggregate apply to the federal IDR process associated with the NSA. So hopefully that's clear evidence.

Speaker #12: It is certainly to employers of all sizes that the IDR process is not working. Certainly not as Congress intended it. And it needs to be reformed.

And then I guess further evidence of the of the weaknesses of the IDR process and some of the things that continue to evolve making it Dynamic and why it's changed from what it's been in the past, the average payout from Arbiters. Uh, when they side with out a network providers is now 11 timeslot.

Speaker #12: So those are some of the inside numbers and they're accelerations into this year and where we think it needs to go. Thanks for the question.

With some of those decisions ranging up to 30 times what Medicare would pay. So these numbers continue to evolve; they have accelerated. There are, of course, geographic variations to that, as in certain states.

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

Speaker #1: And we'll go next to Anne Hines with Mizuho Securities.

Their process supersedes the federal process for insured business.

Speaker #13: Great. Thank you. I just want to circle back on Medicare. I know you in the original guidance, you said trend was 10%. And if you break out the levels, I believe that elevated core utilization assumption was around 7.5%.

Dan Schumacher: to the federal IDR process associated with the NSA. Hopefully that's clear evidence. It is certainly to employers of all sizes that the IDR process is not working, certainly not as Congress intended it, and it needs to be reformed. Those are some of the inside numbers, and their accelerations into this year and where we think it needs to go. Thanks for the question.

Dan Kueter: to the federal IDR process associated with the NSA. Hopefully that's clear evidence. It is certainly to employers of all sizes that the IDR process is not working, certainly not as Congress intended it, and it needs to be reformed. Those are some of the inside numbers, and their accelerations into this year and where we think it needs to go. Thanks for the question.

Speaker #13: You had just regulatory changes like the doc fix, which was like another 1.5%. And then you had maybe 100 basis points of unknown risk.

Speaker #13: And I think you said that unknown risk is not happening, which is probably a tailwind for you. But I just want to focus on that first part, that 7.5% versus 2025.

Tim Noel: Thanks, Dan.

Stephen Hemsley: Next question, please.

Steve Hemsley: Next question, please.

And it needs to be reformed. So those are some of the inside numbers, uh, and their accelerations, uh, into this year and where we think it needs to go. Thanks for the question. Thanks, Dan. Next question, please.

Operator: We'll go next to Ann Hynes with Mizuho Securities.

And we'll go next to Anne Hines with Meizuo Securities.

Ann Hynes: Great. Thank you. I just want to circle back on Medicare. I know you, in the original guidance, you said trend was 10%. If you break out the levels, I believe that elevated core utilization assumption was around 7.5%. You had just regulatory changes like the doc fix, which was another 1.5%, and then you had maybe 100 basis points of unknown risk. I think you said that unknown risk is not happening, which is probably a tailwind for you. I just want to focus on that first part, that 7.5% versus 2025. Can you give us what that's tracking after the H1 of 2026? I'm not sure if I missed it, but I know your original guidance had 10% cost trend in MA. What does the new guidance assume? Thank you.

Speaker #13: Can you give us what that's tracking after the first half of 2026? And I'm not sure if I missed it, but I know your original guidance had 10% cost trend in MA.

Speaker #13: What is the new guidance assume? Thank you.

Speaker #2: Tim, do you want to start?

Speaker #12: Yeah. Thanks for the question, Anne. So you're right anchoring to the 7.5%, which is what we saw in 2025, how that has restated somewhat favorably.

Speaker #12: And Bobby's remarks, he did acknowledge that we did have an accommodation for some unknowns with respect to the environment that we saw last year if we planned for 2026.

Speaker #12: Things like tariffs, we haven't needed the full accommodation for that in 2026 so far. But we're still only about halfway through the year. So we're going to wait to provide a new point estimate around the 2026 trend, probably until the next call when we've seen more of the year develop.

Great. Thank you. I just want to Circle back on Medicare. I know you and the original guidance. Um, you said Trend was 10% and if you break out the levels, I believe that like that elevated core utilization, assumption was around 7 and a half percent. You had just regulatory changes like the doc fix, which was like another 1.5%. And then you had maybe a 100 basis points of unknown risk. And I think you said that unknown risk is not happening, which is probably a Tailwind for you, but I just want to focus on that first part that 7 and a half percent versus 2025. Can you give us what that's tracking? Um, after the first half of 2026? And I'm not sure if I missed it. But um, I know your original guidance had 10% cost for an ma. What is the new guidance assume? Thank you.

Dan Schumacher: Tim, do you want to start?

Dan Kueter: Tim, do you want to start?

Tim Noel: Yeah. Thanks for the question, Ann. You're right, anchoring to the 7.5%, which is what we saw in 2025. That has restated somewhat favorably. In Bobby's remarks, he did acknowledge that we did have an accommodation for some unknowns with respect to the environment that we saw last year as we planned for 2026, things like tariffs. We haven't needed the full accommodation for that in 2026 so far. We're still only about halfway through the year, so we're going to wait to provide a new point estimate around the 2026 trend, probably until the next call, when we've seen more of the year develop. I think the bottom line is that we are seeing trend that's a little lower than what those planning expectations were.

Speaker #12: But I think the bottom line is that we are seeing trend that's a little lower than what those planning expectations were and we're also feel good about our ability to take actions both in benefit planning and some of the other elements that Bobby talked about to influence that and to manage that.

Tim, do you want to start? Yeah. Uh thanks for the question and um so you're right anchoring to the 7 and a half percent um which which is what we saw. Um in 2025 how that has restated you know, somewhat favorably um and Bobby's remarks, he all he did um acknowledge that. We did have an accommodation um for some unknowns, with respect to the environment that we saw last year, if we planned for 2026 things like ter,

Speaker #12: And to promote affordability in this key program. But we'll more to come on specific point estimates as we pace through the year.

Speaker #2: Thanks.

Speaker #13: Thank you.

Speaker #2: Next question, please.

Speaker #1: And we'll go to Lance Wilkes with Bernstein.

Speaker #14: Great. Thanks so much. I wanted to talk about Optum Health. And could you just talk a little about where you're seeing margins for your capitated or value-based care portion of that business as sort of a run rate level this year?

Tim Noel: We also feel good about our ability to take actions both in benefit planning and some of the other elements that Bobby talked about to influence that and to manage that, and to promote affordability in this key program. More to come on specific point estimates as we pace through the year.

Speaker #14: Is that a trough or is that up a little from last year? And then what are the actions you're taking as you're moving forward into the second half in '27 to improve upon that as far as changes in contracting, changes in risk-taking, or footprint?

Ann Hynes: Thank you.

Dan Schumacher: Thank you.

Dan Kueter: Thank you.

Stephen Hemsley: Next question, please.

Steve Hemsley: Next question, please.

Of, um, we haven't needed the full, um, accommodation for that in 2026 so far, um, but we're still only about halfway through the year, so we're going to wait to provide a new Point estimate, um, around the 2026 Trend, um, probably until the next call. Um, when we've seen more of the Year develop, but you know, I think the bottom line is that, um, we are seeing Trend that's a little lower um, than what those planning expectations were and then we're all so, you know, feel good about our ability to take actions both in Venice and planning and some of the other elements that Bobby talked about um, to influence that and to manage that um and to promote um affordability um in this uh key program but we'll um more to come on specific point estimates. Um as we paced through the year. Thanks, thank you.

Operator: We'll go to Lance Wilkes with Bernstein.

Speaker #14: And then in general, how are you refining that model and are you seeing a different demand for services from maybe the employer segment? Are there MA managed care companies as well?

Next question, please. And we'll go to Lance Wils with Bernstein.

Lance Wilkes: Great. Thanks so much. Wanted to talk about Optum Health. Could you just talk a little about where you're seeing margins for your capitated or value-based care portion of that business as sort of a run rate level this year? Is that a trough or is that up a little from last year? What are the actions you're taking as you're moving forward into H2 in 2027 to improve upon that as far as changes in contracting, changes in risk-taking or footprint? In general, how are you refining that model, and are you seeing a different demand for services from maybe the employer segment, other MA managed care companies as well? Thanks.

Speaker #14: Thanks.

Speaker #2: Krista.

Speaker #15: Yeah. Thanks for the question, Lance. A couple of things in there. First, I'll just start with your first question around just our value-based care kind of risk margins.

Speaker #15: Overall, I think the performance in the first half of the year has been strong. And slightly better than we expected. Maybe I'll just kind of provide some drivers of that.

Great. Thanks so much. Uh, I wanted to talk about Optum health and could you just talk a little about, um, where you're seeing margins for your capitated, our value based care, portion of that business, uh, it's sort of a run rate level this year, is that a trough or, or is that up a little from last year and then what are the actions you're taking as you're moving forward into the second half in 27 to improve upon that as far as changes in Contracting changes in Risk taking or or footprints?

Speaker #15: The first is just overall medical. You heard in our prepared remarks us talk about the work we're doing on care management and clinical management.

Speaker #15: The efforts that we launched in the West that we talked about last quarter scaling, maturing, and expanding into other regions those efforts continue to provide meaningful improvement in the business.

And then, in general, how are you refining that model? And are you seeing a different demand for services from maybe the employer segment or from managed care companies as well? Thanks.

Dan Schumacher: Krista.

Dan Kueter: Krista.

Krista Nelson: Yeah. Thanks for the question, Lance. A couple of things in there. First, I'll just start with your first question around just our value-based care kind of risk margins. Overall, I think the performance in H1 of the year has been strong and slightly better than we expected. Maybe I'll just kind of provide some drivers of that. The first is just overall medical. You heard in our prepared remarks us talk about the work we're doing on care management and clinical management. The efforts that we launched in the West that we talked about last quarter, scaling, maturing, and expanding into other regions. Those efforts continue to provide meaningful improvement in the business. To your question around H2, those things will continue.

Speaker #15: And kind of to your question around second half, those things will continue. That was just really one example. That's providing about a 10% reduction in inpatient admissions, but there are a handful of other initiatives that we continue to deploy to improve care management and medical performance.

Speaker #15: Another driver is our operating performance. And again, we talked about that in the prepared remarks, but it's worth noting all the investments we're making to improve whether it's provider productivity, scheduling enhancements, access to care.

Speaker #15: We've expanded patient-facing hours by 200,000 hours. In the first part of the year, we've again, expanding access while we're also improving patient satisfaction. Our patient satisfaction is up about 5%.

Krista Nelson: That was just really one example that's providing about a 10% reduction in inpatient admissions. There are a handful of other initiatives that we continue to deploy to improve care management and medical performance. Another driver is our operating performance. Again, we talked about that in the prepared remarks. It's worth noting all the investments we're making to improve, whether it's provider productivity, scheduling enhancements, access to care. We've expanded patient-facing hours by 200,000 hours in the H1. We're again expanding access while we're also improving patient satisfaction. Our patient satisfaction is up about 5%. We've also increased patient engagement with our high-risk population, about 6%. A handful of items that, again, I would just say will continue in the H2.

Speaker #15: And then we've also increased patient engagement with our high-risk population about 6%. So a handful of items that, again, I would just say will continue in the second half of the year.

Chris. Yeah, thanks for the question. Lance a couple things in their first. I'll just start with um, your first question around. Just our value based care kind of risk, margins. Um, you know, overall I think the performance of the first half of the year has been strong and um, slightly better than we expected. Um, maybe I'll just kind of provide some drivers of that. The first is, you know, just overall medical. Um, you know, you heard in our prepared remarks of talk about the work we're doing on Care Management and clinical management. Um, the efforts that we launched in the west that we talked about last quarter scaling maturing and expanding into other regions, those efforts continue to provide meaningful Improvement in the business. And, you know, kind of to your question around second half those things will continue. Um, that was just really 1 example. That's providing about a 10% reduction in inpatient admissions but there are a handful of other initiatives that we continue to deploy to improve Care, Management and medical performance.

Speaker #15: So our value-based care margins performing in line, but slightly better than what we would have expected. It's really coming through in our medical performance, in our operating discipline.

Speaker #15: Those items will continue. I think you also just asked about efforts with our payers and our contracting. So those continue to go very well.

Speaker #15: I'm most pleased with their commitment to value-based care. I think we are very strategically aligned with our payer partners that value-based care improves quality.

Speaker #15: It lowers the total cost of care. It improves the experience for our patients. And it improves the experience for our clinicians. So through those commitments, the first half of the year, we've focused on 2027 benefit planning, making sure we're aligned on footprint, on rates, on benefit designs.

Krista Nelson: Our value-based care margins performing in line, but slightly better than what we would have expected. It's really coming through in our medical performance, in our operating discipline. Those items will continue. I think you also just asked about efforts with our payers and our contracting. Those continue to go very well. I'm most pleased with their commitment to value-based care. I think we are very strategically aligned with our payer partners that value-based care improves quality, it lowers the total cost of care, it improves the experience for our patients, and it improves the experience for our clinicians. Through those commitments, the H1, we've focused on 2027 benefit planning, making sure we're aligned on footprint, on rates, on benefit designs. Our contracting efforts are going really well with the vast majority of those addressable for 2027 really complete.

Speaker #15: Our contracting efforts are going really, really well with the vast majority of those addressable for '27, really complete. But the second half of the year is really going to be focused on some of those post-bid strategies and making sure that we're aligned on how we go to market for '27.

Speaker #15: Thanks so much for the question.

Speaker #2: Thank you, Krista. Next question, please.

Speaker #1: And up next is George Hill with Deutsche Bank.

Speaker #16: Yeah. Good morning and thanks for taking the question. I kind of have two quick ones. I guess number one is could you talk about the surgical volumes that you guys are seeing in outpatient surgical volumes?

Medical performance in our operating discipline. Those items will continue. I think you also just asked about, um, efforts with our payers and our Contracting. So, um, those continue to go very well. I'm most pleased with their commitment to Value based care. I think we are very strategically aligned with our payer partners. That value based care improves quality, it lowers, the total cost of care. It improves the experience for our patients and it improves the experience for our clinicians. Um, so through those commitments, the first half of the year we've focused on 2027 benefit planning making sure we're aligned on footprint on rates, on benefit designs.

Speaker #16: Does that seem to be a trend that has concerned investors across the space? And I had a quick follow-up on the Optum Insight business, which is where you guys at least our expectation is pretty handily in the quarter.

Krista Nelson: The H2 is really going to be focused on some of those post-bid strategies and making sure that we're aligned on how we go to market for 2027. Thanks so much for the question.

Speaker #16: But guidance didn't kind of increase commensurate with the beat. Would you be interested in comments on cadence as it relates to Optum Health?

Um, you know, our contracting efforts are going really, really well, with the vast majority of those addressable for '27 really complete. But the second half of the year is really going to be focused on some of those post-bid strategies and making sure that, you know, we're aligned on how we go to market for '27. Um, thanks so much for the question.

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

Steve Hemsley: Thank you, Kristen. Next question, please.

Speaker #2: So Krista, you want to take the first?

Thank you. Kristen, next question, please.

Operator: Up next is George Hill with Deutsche Bank.

Speaker #15: Yeah. I think specifically to the question on surgical volumes, again, those actually are pacing in line with our expectations. I think just as I spoke about the operating performance in the business in the last question, the work we're doing around operating discipline, I think, is not just in our risk-based business, but it also applies to our fee-for-service businesses.

And up next is George Hill with Deutsche Bank.

George Hill: Yeah. Good morning, and thanks for taking the question. I have two quick ones, I guess. Number one is, could you talk about the surgical volumes that you guys are seeing in outpatient surgical volumes, as that seems to be a trend that has concerned investors across the space. I had a quick follow-up on the Optum Insight business, which is where you guys beat at least our expectations pretty handily in the quarter, guidance didn't increase commensurate with the beat. Would you be interested in comments on cadence as it relates to Optum Health?

Yeah, uh, good morning and thanks for taking the question. I kind of have two quick ones, I guess, simple ones. Could you talk about the surgical volumes that you guys are seeing in outpatient? Surgical volumes—does that seem to be a trend that has concerned investors across the space?

Speaker #15: And again, a reminder, all of our fee-for-service businesses are really pointed towards an operated at higher value sites of care, like ASCs, which are generally about a third of the cost of hospital-based procedures.

But I had a quick follow-up on the Optum Insight business, which is where you guys beat at least our expectations pretty handily in the quarter. But guidance didn't kind of increase in commentary with the beat. Would you be interested in comments on cadence as it relates to OptumHealth?

Stephen Hemsley: Krista, you want to take the first?

Steve Hemsley: Krista, you want to take the first?

Krista Nelson: Yeah. I think specifically the question on surgical volumes, again, those actually are pacing in line with our expectations. I think just as I spoke about the operating performance in the business in the last question, the work we're doing around operating discipline, I think, is not just in our risk-based business, but it also applies to our fee-for-service businesses. Again, a reminder, all of our fee-for-service businesses are really pointed towards and operated at higher value sites of care, like ASCs, which are generally about a third of the cost of hospital-based procedures. Again, inside that ASC business, specifically, earnings are growing in line with expectations, volumes are in line, physician recruitment, provider productivity, and really our mix of services is all in line to slightly better than what we would have expected.

Speaker #15: And again, so inside that ASC business specifically, earnings are growing in line with expectations. Volumes are in line. Physician recruitment, provider productivity, and really our mix of services is all in line, to slightly better than what we would have expected.

Speaker #2: Thank you, Sandeep. Thank you, George. And you're right. We at Optum Insight, we are slightly ahead of expectations for Q2. But overall, we remain on track for our full-year guidance.

Speaker #2: Q2 performance was driven by strong operational execution. Some of that actually due to the early AI investments we made in AI efficiency gains. But there's also some client transaction volume that moved earlier into the year from H2 to H1, more than we expected.

Speaker #2: And then we continue to invest. Even in the back half of this year into new AI products and services. Where we see early positive momentum from customers.

Stephen Hemsley: Thank you. Sandeep?

Steve Hemsley: Thank you. Sandeep?

So Chris, you want to take the first? Yeah, I think, you know, specifically to the question on surgical volumes. Um, again those actually are pacing in line with our expectations. I think just uh, you know, as I spoke about the operating performance and the business in the last question, you know, the work we're doing around, um, operating discipline, I think is not just in our risk based business, but it also applies to our fee for service businesses. And again, a reminder, all of our fee for service businesses are really pointed towards an operated at higher value, sites of care like afc's which are generally about a third of the cost of hospital-based procedures. And and again, so inside that AFC business, specifically earnings are growing in line of expectations, volumes are in line position recruitment, provider productivity, and really our mix of services is all in line. Um, to slightly better than what we would have expected.

Thank you, Cindy.

Sandeep Dadlani: Thank you, George. You're right. At Optum Insight, we are slightly ahead of expectations for Q2. Overall, we remain on track for our full year guidance. Q2 performance was driven by strong operational execution, some of that actually due to the early AI investments we made in AI efficiency gains. There's also some client transaction volume that moved earlier into the year from H2 to H1 more than we expected. We continue to invest, even in the back half of this year, into new AI products and services where we see early positive momentum from customers. A combination of all this, we remain confident in our full year guidance. Overall, Optum Insight remains on a multi-year path of reinvestment and innovation, and we're looking forward to the future with excitement. Thank you.

Speaker #2: So a combination of all this, we remain confident in our full-year guidance. Overall, Optum Insight remains on a multi-year path of reinvestment and innovation.

Speaker #2: And we're looking forward to the future with excitement. Thank you.

Speaker #16: Next question, please.

Speaker #1: And we'll go next to Aaron Wright with Morgan Stanley.

Uh, thank you, George, and you're right. We uh, at Optimum Insight, we are slightly ahead of expectations for Q2, uh, but overall, we remain on track for our full year, guidance. Uh, Q2 performance was driven by strong operational execution. Some of that actually due to the early AI Investments we made in AI efficiency gains. But there's also some client transaction, volume that moved earlier into the year from h.

Speaker #17: Great. Thanks so much. Can you speak a bit more specifically on AI? And can some of your AI initiatives actually accelerate or drive upside to the long-term margin targets?

Q2 to H1, more than we expected.

Speaker #17: For instance, across Optum Health in particular, are some of that more of the near-term blocking and tackling that you're doing there? And just are those benefits from an AI perspective, is that I would assume that that builds into 2027 and it's more material in 2028 and beyond?

Stephen Hemsley: Next question, please.

Steve Hemsley: Next question, please.

Uh, and then we continue to invest, uh, even in the back half of this year into new AI products and services, where we see early, positive momentum from customers. So, combination of all this, we remain confident in our full year guidance. Um, overall, OptumInsight remains on a multi-year path of reinvestment and innovation, uh, and we're looking forward to the future with excitement. Thank you.

Next question, please.

Speaker #17: Or I guess how should we think about those efforts driving even more upside relative to your long-term targets? Thanks.

Operator: We'll go next to Erin Wright with Morgan Stanley.

And we'll go next to Aaron Wright with Morgan Stanley.

Erin Wright: Great. Thanks so much. Can you speak a bit more specifically on AI, and can some of your AI initiatives actually accelerate or drive upside to the long-term margin targets, for instance, across Optum Health in particular? Or is some of that more of the near-term blocking and tackling that you're doing there? Are those benefits from an AI perspective, is that I would assume that that builds into 2027 and it's more material in 2028 and beyond? I guess, how should we think about those efforts driving even more upside relative to your long-term targets? Thanks.

Speaker #2: Sure. Well, we'll take this one like a we'll take this as a team. Activity. Because actually, AI is a very core initiative for us.

Speaker #2: We are really thinking of it in terms of reimagining our entire enterprise, virtually everything that we do. And we see it basically as the operating infrastructure of the future.

Speaker #2: And so it really is occurring across the spectrum of our businesses. And as you are suggesting in your question, this is the beginning, but it will have compounding effects as we make these investments we continue to get this change driven into our business.

Stephen Hemsley: Sure. Well, we'll take this as a team activity, because actually AI is a very core initiative for us. We are really thinking of it in terms of reimagining our entire enterprise, virtually everything that we do, and we see it basically as the operating infrastructure of the future. It really is occurring across the spectrum of our businesses. As you are suggesting in your question, this is the beginning, but it will have compounding effects as we make these investments. We continue to get this change driven into our business. It's also a real catalyst and a real opportunity in terms of the Optum Insight business to take everything that we're doing here and bringing commercial versions to the marketplace.

Steve Hemsley: Sure. Well, we'll take this as a team activity, because actually AI is a very core initiative for us. We are really thinking of it in terms of reimagining our entire enterprise, virtually everything that we do, and we see it basically as the operating infrastructure of the future. It really is occurring across the spectrum of our businesses. As you are suggesting in your question, this is the beginning, but it will have compounding effects as we make these investments. We continue to get this change driven into our business. It's also a real catalyst and a real opportunity in terms of the Optum Insight business to take everything that we're doing here and bringing commercial versions to the marketplace.

Great. Thanks so much. Can you speak a bit more specifically on AI and and can some of your AI initiatives, actually, accelerate our drive upside to the long term, margin targets, for instance, across Optum Health in particular are some of that more of The near-term Blocking and tackling that you're doing there and just are those benefits from. An AI perspective is that I would assume that that builds into 2027 and it's more material in 2028 and Beyond. Or I guess how, how should we think about those efforts driving? Even more upside relative to your long-term targets. Thanks.

Sure. Well, um, we'll take this one like a, a, we'll take this as a team, um, activity.

um, because actually AI is

um, a very

Speaker #2: And it's also a real catalyst and a real opportunity in terms of the Optum Insight business to take everything that we're doing here and bringing commercial versions to the marketplace.

A core initiative for us—we are really thinking of it in terms of reimagining our entire enterprise, virtually everything that we do. And we see it basically as the operating infrastructure of the future.

Speaker #2: So maybe I'll start on the United Healthcare side with Tim Knoll. But then we'll move to Optum and also to talk maybe Wayne will comment a little bit at the corporate group level.

And so, it really is our current spectrum of our businesses. And as you are suggesting in your question,

Speaker #2: So Tim.

Speaker #18: Yeah. So deployment of AI and other advanced technologies like it are a key and critical focus area across UHC. Also a big enabler of our modernization agenda that we're advancing rapidly.

Stephen Hemsley: Maybe I'll start on the UnitedHealthcare side with Tim Noel, but then we'll move to Optum and also to talk, maybe Wayne will comment a little bit at the corporate group level. Tim.

Steve Hemsley: Maybe I'll start on the UnitedHealthcare side with Tim Noel, but then we'll move to Optum and also to talk, maybe Wayne will comment a little bit at the corporate group level. Tim.

Speaker #18: It's unlocking a lot of game-changing opportunities to improve consumer and care providers' experiences and make the system operate a lot more efficiently at the same time.

So, uh, maybe I'll start, uh, on the United Healthcare side with, uh, Tim null. But then we'll move, uh, to, um,

Speaker #18: And I agree with your kind of commentary on the pacing where we're going to see that accelerate into 2027 and even go deeper in terms of the efficiencies provided kind of across the board into 2028.

Um, Optum, and uh, also to talk—maybe Wayne will comment a little bit at the corporate group level. So, Tim,

Tim Noel: Yeah. Deployment of AI, and other advanced technologies like it, are a key and critical focus area across UHC. Also, a big enabler of our modernization agenda that we're advancing rapidly. It's unlocking a lot of game-changing opportunities to improve consumer and care providers' experiences and make the system operate a lot more efficiently at the same time. I agree with your kind of commentary on the pacing, where we're going to see that accelerate into 2027 and even go deeper in terms of the efficiencies provided kind of across the board into 2028. As we're focused on this, you would imagine that we obviously have large scale capital projects that we're deploying, but perhaps more importantly and significantly, we're infusing AI across all of our administrative activities. A couple of examples just to kind of bring that to light across UnitedHealthcare.

Speaker #18: But as we're focused on this, you would imagine that we obviously have large-scale capital projects that we're deploying. But perhaps more importantly and significantly, we're infusing AI across all of our administrative activities.

Speaker #18: And a couple of examples just to kind of bring that to light across United Healthcare. First, virtually every provider and consumer interaction uses AI.

Speaker #18: AI gives us the ability to empower our advocates with predictive insights, real-time data, which all leads to more productive interactions and importantly also lends itself to translating some of those experiences into digital experiences that are oftentimes and most times come with better provider and consumer satisfaction as well.

Yeah, so deployment of AI um and other Advanced Technologies. Like it are a key in critical Focus area across UHC. Also, um, a big enabler of our modernization agenda that we're advancing rapidly. Um, you know, it's unlocking a lot of game-changing opportunities to improve consumer and care providers experiences and make, um, the system operate a lot more efficiently at the same time. And I agree with with your kind of commentary on the pacing where we're going to see that accelerate into 2027. And even, um, go deeper in terms of the efficiencies provided kind of a cross the board in in the 2028. But as we're focused on this, you would imagine that we obviously have large scale, um, capital projects that were to point, but perhaps more importantly and significantly, we're infusing AI, um, across all of our administrative administrative activities, um, and a couple of examples, just to kind of bring that a bring that to light across United Healthcare.

Speaker #18: Also key to our ability to proactively identify members that are in distress and reach out to them with concierge-like service models to help them through those moments.

Tim Noel: First, virtually every provider and consumer interaction uses AI. AI gives us the ability to empower our advocates with predictive insights, real-time data, which all leads to more productive interactions, importantly, also lends itself to translating some of those experiences into digital experiences that oftentimes and most times, come with better provider and consumer satisfaction as well. Also key to our ability to proactively identify members that are in distress, and reach out to them with concierge-like service models to help them through those moments. Second area is it's providing step function enhancements in our core operations. Things like very complex claims that we never before thought we would be able to automate. We're able to automate those and process those with higher accuracy than we have been able to before, which eliminates cost and also increases turnaround times, which is very important.

Speaker #18: Second area is it's providing step function enhancements in our core operations. Things like very complex claims that we never before thought we would be able to automate.

Speaker #18: We're able to automate those and process those with higher accuracy. Then we have been able to before which eliminates cost and also increases turnaround times, which is very important.

Speaker #18: And a very encouraging element to all of this is this is facilitating interoperability with health systems and care providers. And we've seen a really great appetite for us.

Speaker #18: And these efforts, and it's providing the opportunity on both sides to eliminate latency with some of this real-time information sharing that's now enabled and now going on.

Um, first virtually, every provider, um, and consumer interaction and uses ai, ai it gets us, the ability to empower, our Advocates with predictive insights real time data. Um, which all leads to more productive interactions and importantly, also lends itself to translating some of those experiences in the digital experiences that are. Um, oftentimes and most times, um, come with better provider, um, and, uh, consumer satisfaction as well. Um, also key to our ability to proactively identify members that are in distress, um, and reach out to them with consear, like service models, to help them through those moments. Um, second area is it's providing step function. Um, enhancements in our core operations, you know, things like very complex claims that we never before thought we would be able to automate. Um, we're able to automate those and

Speaker #18: That all comes to light in our commitment to process 80% of our prior authorizations in real-time. By the end of 2027. And in doing so, it creates kind of a touchless environment, which eliminates a lot of the back and forth between health systems, care providers, and health plans.

Tim Noel: A very encouraging element to all this is, this is facilitating interoperability with health systems and care providers. We've seen a really great appetite for health systems to partner with us in these efforts, and it's providing the opportunity on both sides to eliminate latency with some of this real-time information sharing that's now enabled and now going on. That all comes to light in our commitment to process 80% of our prior authorizations in real time by the end of 2027. In doing so, it creates kind of a touchless environment, which eliminates a lot of the back and forth between health systems, care providers, and health plans, which not only improves experiences, but you can imagine the elimination of the abrasion unlocks a lot of operational efficiencies for both health systems and health plans.

Speaker #18: Which not only improves experiences, but you can imagine the elimination of the abrasion unlocks a lot of operational efficiencies for both health systems and health plans.

Process those with higher accuracy. Um, then we have been able to before which eliminates cost and also increases, um, turnaround times, which is, um, very important, um, and a very encouraging element to all. This is this is facilitating, um, interoperability with health systems and and care providers. And we've seen a really, um, great appetite, um, for Health Systems to partner with us and these efforts, and it's providing the opportunity on both sides.

Speaker #18: In the last area to note is it's giving us the ability to provide better data insights because we're able to, in a more real-time basis, look at data sets far broader than what we've been able to look at in the past.

Speaker #18: This gives us better understanding around our business performance and also lends itself to things like real-time underwriting, across both our commercial and Medicare business.

Speaker #18: And as we think about our modernization agenda, one of our focus here is to focus on outlier activity and be able to customize our utilization management programs to reduce prior authorizations and other programs for the broad population because we have the ability to more customize some of those approaches.

Tim Noel: The last area to note is it's giving us the ability to provide better data insights because we're able to, in a more real-time basis, look at data sets far broader than what we've been able to look at in the past. This gives us better understanding around our business performance and also lends itself to things like real-time underwriting across both our commercial and Medicare business. As we think about our modernization agenda, one of our focus here is to focus on outlier activity and be able to customize our utilization management programs to reduce prior authorizations and other programs for the broad population because we have the ability to more customize some of those approaches. A couple of key reminders, though, as we think about how we're approaching this in UHC is, number one, clinicians will always be involved in these processes.

Speaker #18: A couple of key reminders though. As we think about how we're approaching this in UHC is number one, clinicians will always be involved in these processes.

Speaker #18: If services are not authorized, that decision will ultimately be made by a clinician. And the second thing to note and remind folks of is that our contact centers are getting far more efficient but they will never be fully automated.

Speaker #18: Engaging with the healthcare system that we play an important role in will always be deeply personal. We see great opportunity to invest some of the savings that we're getting from these efficiencies in actually enhanced and more concierge service like models.

So I had a more real-time basis, um, look at data sets far broader than what we've been able to look at, um, in the past. Um, this gives us better understanding around our business performance and also lends itself to things like real-time underwriting, um, across both our commercial, um, and Medicare business. Um, and as we think about our modernization agenda, you know, one of our focus areas here is to focus on outlier activity and be able to, um, customize our utilization management programs to reduce prior authorizations and other programs for the broad population, because we have the ability to more customized, um, some of those approaches.

Tim Noel: If services are not authorized, that decision will ultimately be made by a clinician. The second thing to note and remind folks of is that our contact centers are getting far more efficient, but they will never be fully automated. Engaging with the healthcare system that we play an important role in will always be deeply personal. We see great opportunity to invest some of the savings that we're getting from these efficiencies in actually enhanced and more concierge service-like models. We're going to always have options for human interactions as we approach this.

Speaker #18: So we're going to always have options for human interactions as we approach this.

Speaker #19: So it may be Patrick, you want to just comment briefly and then maybe send Deep a comment. Because I don't want to spend that much time on this.

Speaker #2: Yeah. So on Optum, I'd call out AI in a few ways. First, it is a transformational, durable way to change our business. Maybe most importantly though, I'd call out in the modernization frame is we use AI, it delivers better patient experience, better experience and results for our customers.

Couple a key reminders though. Um, as we think about how we're approaching this in UHC is number 1. Um, clinicians will always be involved in these processes. If services are not authorized, that decision will ultimately be made um by a clinician. Um, and the second thing to note and remind folks of is that our our contact centers are getting far more efficient, but they will never be fully automated um, engaging with the health care system that we play an important role in will always be deeply personal personal. Um, we see great opportunity to invest some of the savings that we're getting from these efficiencies in actually enhanced and more consear service like like models. So, we're going to always have options for

Speaker #2: And a better experience for clinicians and care providers. So I'll hit on a few examples there. Because it's really about helping the health system work better for all stakeholders.

Human interactions. Um, as we approach this,

Stephen Hemsley: Maybe, Patrick, you want to just comment briefly and then maybe Sandeep, a comment, because I don't want to spend that much time on this.

Steve Hemsley: Maybe, Patrick, you want to just comment briefly and then maybe Sandeep, a comment, because I don't want to spend that much time on this.

So, maybe Patrick, you want to just comment briefly, and then maybe send Deep a comment?

Speaker #2: So I'll call out two areas and then I'll let Sandeep call products and services. So the third area. First area I'll call out is administrative efficiency, where we're using AI to summarize cases, for example, for care managers.

Because I—I don't want to spend that much time on this.

Patrick Conway: Yeah. On Optum, I'd call out AI in a few ways. First, it is a transformational durable way to change our business. Maybe most importantly, though, I'd call out in the modernization frame, as we use AI, it delivers better patient experience, better experience and results for our customers, and a better experience for clinicians and care providers. I'll hit on a few examples there, because it's really about helping the health system work better for all stakeholders. I'll call out two areas, and then I'll let Sandeep call products and services, the third area. First area I'll call out is administrative efficiency, where we're using AI to summarize cases, for example, for care managers. Makes it 40% faster for that nurse care manager, more efficient.

Speaker #2: Makes it 40% faster for that nurse care manager, more efficient. Also allows him or her to spend more time with patients, more time delivering care, in the home or whatever the setting may be.

Speaker #2: Second, in the Optum Insight business, digital prior authorization powered by AI, producing 96% first pass approval. So now enabling humans and as Tim said, same on the Optum, it's a UHG principle.

Speaker #2: If something's not approved, we have a human look at that. But 96% first pass approval using AI, making the system simpler, better, faster, for the people involved, the providers, and the patients.

Patrick Conway: Also allows him or her to spend more time with patients, more time delivering care in the home or whatever the setting may be. Second, in the Optum Insight business, digital prior authorization powered by AI, producing 96% first pass approval. Now enabling humans, and as Tim said, same on the Optum, it's a UHG principle. If something's not approved, we have a human look at that. 96% first pass approval using AI, making the system simpler, better, faster for the people involved, the providers and the patients. The second area I'll call out is clinical support. This is AI supporting humans and clinicians delivering care. We talked about ambient clinical documentation and the uptake of 70% in employed Optum Health clinicians today, going to 90% by year-end. Let me give you a stat on burnout. 90% reduction using AI in the cognitive burnout for the clinicians.

Speaker #2: The second area I'll call out is clinical support. This is AI supporting humans and clinicians delivering care. We talked about ambient clinical documentation and the uptake of 70% and employed Optum Health clinicians today going to 90% by year-end.

Yeah, so on Optum my call out, uh, AI in a few ways. First, it is a transformational, uh, durable way to change our business. Maybe most importantly, though I'd call out in the modernization frame is we use AI, it delivers better patient experience better experience and results for our customers, and a better experience for clinicians and care providers. So, I'll hit on a few examples there because it's really about helping the health system work, better for all stakeholders. So I'll call out 2 areas and then I'll let Sandeep, call products and services. So the the third area first area, I'll call out, is Administrative efficiency where we're using AI to summarize cases. For example, for care managers, makes it 40% faster for that nurse care manager, more efficient, also allows him or her to spend more time with patients, more time, delivering care, uh, in the home or whatever the setting may be.

Second, in the Optum Insight business, digital prior authorization powered by AI.

Speaker #2: Let me give you a stat on burnout. 90% reduction. Using AI. And the cognitive burnout for the clinicians. So when you go visit these clinicians and they talk about how it helps them deliver care better to patients, incredibly meaningful.

Producing 96% first pass approval, so now enabling humans. And as Tim said, same on the Optum. It's a UHG principle—if something's not approved, we have a human look at that. But 96% first pass approval, using AI, making the system simpler, better, faster for the people involved—the providers and the patients.

Speaker #2: And then the scheduling, which Chris talked about. We're using AI to make sure that people get access to specialist care in a timely fashion.

Speaker #2: So an example of improving access using AI. I'll turn it over to Sandeep to hit the products and services, which is the third major area.

Speaker #19: Yeah. And really one quick example that probably strings through everything that Tim Noel and Patrick described is that about a third of our investments this year are going into commercializing all these internal use cases to external products.

Patrick Conway: When you go visit these clinicians and they talk about how it helps them deliver care better to patients, incredibly meaningful. The scheduling, which Krista talked about. We're using AI to make sure that people get access to specialist care in a timely fashion. An example of improving access using AI. I'll turn it over to Sandeep to hit the products and services, which is the third major area.

Speaker #19: The prior auth example that Tim described, that Patrick described, has been converted into a digital prior auth product, which we launched about a quarter ago under the Optum real family of products.

Speaker #19: And here till date, it has for external entities to UHG, processed about 69,000 prior auths. And processed about half a million prior auths and saved 69,000 administrative hours.

Sandeep Dadlani: Yeah, really one quick example that probably strings through everything that Tim Noel and Patrick described is that about a third of our investments this year are going into commercializing all these internal use cases to external products. The prior auth example that Tim described, that Patrick described, has been converted into a digital prior auth product, which we launched about a quarter ago under the Optum Real family of products. Year to date, it has, for external entities to UHG, processed about 69,000 prior auths, and so it has processed about half a million prior auths and saved 69,000 administrative hours. This is in real life, in real time, an internal use case, which we are investing in giving us internal efficiencies that is being converted into a commercial external product, helping improve the system and making it better for everyone. Thank you.

Speaker #19: So this is in real-life and real-time and internal use case which we're investing in giving us internal efficiencies that is being converted into a commercial external product helping improve the system and making it better for everyone.

The second area I I'll call out is clinical support. This is AI supporting, uh, humans and clinicians, delivering care, we talked about ambient clinical documentation, and the uptake of 70% and employed Optimum Health, uh, clinicians today going to 90% by year end. Um, let me give you a stat on burnout 90% reduction using Ai and the cognitive burnout for the clinicians. So when you go visit, these clinicians and they talked about how it helps them, deliver care better to patients, uh, incredibly meaningful. And then the scheduling which Krista talked about we're using AI to make sure that people get access to Specialist Care in a timely fashion. Um, so an example of improving access using AI, I'll turn it over to Sandeep to the products and services which is a third major area. Yeah. And really 1, quick example that uh probably the string through everything that Tim know and Patrick described is that about a third of our investments this year are going into commercializing all these internal

Speaker #19: Thank you.

Speaker #1: And the only thing I'll say at the group level is every function. HR, finance, legal, everything is really being reimagined in an AI context, which we think will drive much greater precision, greater efficiencies, responsiveness.

Speaker #1: We think they're significant opportunities there. So thank you for the question. Next question please.

Speaker #4: And our next question comes from Whit Mayo with Lyric Partners.

Speaker #2: Thanks. I just wanted to take your temperature on stars. I'm not sure if you can comment on expectations or what you know at this point in time or just any thoughts on the recent industry lawsuits.

Use cases to external products. The prior of example, that Tim described that Patrick described has been converted into a digital prior Roth product, which we launched about a quarter ago under the optimum real family of products and year to date. It has for external entities to uhg processed about 69,000 prior arts and say, so processed about half a million prior arts and saved 69,000 administrative hours. So this is in real life in real time and internal use case, which we are investing in. Giving us internal efficiencies, that is being converted into a commercial external product, um, helping improve the system and making it better for everyone. Thank you.

Stephen Hemsley: The only thing I'll say at the group level is every function, HR, finance, legal, and everything, is really being reimagined in an AI context, which we think will drive much greater precision, greater efficiencies, responsiveness. We think there are significant opportunities there. Thank you for the question. Next question, please.

Steve Hemsley: The only thing I'll say at the group level is every function, HR, finance, legal, and everything, is really being reimagined in an AI context, which we think will drive much greater precision, greater efficiencies, responsiveness. We think there are significant opportunities there. Thank you for the question. Next question, please.

Speaker #2: Thanks.

Speaker #19: Sure. Good question. Bobby.

Speaker #20: Yeah. Hey Whit. Thanks for the question. So maybe just to start, like I've said before, we view quality as absolutely critical. And we never take anything for granted with stars.

In an AI context, which we think will drive much greater precision, greater efficiencies, and responsiveness, we think there are significant opportunities there. So, thank you for the question.

Um, next question, please.

Speaker #20: We're restless when it comes to seeking opportunities to differentiate. And we're always focused on delivering the greatest quality experiences and outcomes for our members.

Operator: Our next question comes from Whit Mayo with Leerink Partners.

And our next question comes from Whit Mayo with Lorinc Partners.

Whit Mayo: Thanks. I just wanted to take your temperature on Stars. I'm not sure if you can comment on expectations or what you know at this point in time, or just any thoughts on the recent industry lawsuits. Thanks.

Speaker #20: As you can appreciate and as you kind of alluded to, given where we sit in the current cycle as well as the ongoing industry activity, it wouldn't really be appropriate to speculate on final start year 26 results or what might happen for start year 27 or further into the future.

Uh, thanks. Uh, I just wanted to take your temperature on Starz. I'm not sure if you can comment on expectations or what you know at this point in time, or just any thoughts on the recent industry lawsuits. Thanks.

Stephen Hemsley: Sure. Good question. Bobby?

Steve Hemsley: Sure. Good question. Bobby?

[Company Representative] (UnitedHealth Group): Yeah. Hey, Whit. Thanks for the question. Maybe to start, like I've said before, we view quality as absolutely critical. We never take anything for granted with Stars. We're restless when it comes to seeking opportunities to differentiate, and we're always focused on delivering the greatest quality experiences and outcomes for our members. As you can appreciate and as you kind of alluded to, given where we sit in the current cycle as well as the ongoing industry activity, it wouldn't really be appropriate to speculate on final Star year 2026 results or what might happen for Star year 2027 or further into the future. Recent years, as evidenced by 2026 industry scores at the lowest level in about a decade.

Speaker #20: It's also worth noting the stars program has continued to get more challenging in recent years. As evidenced by 2026 industry scores at the lowest level in about a decade.

Speaker #20: So as we navigate through the next few months, our preferred approach is to continue to partner with CMS as we appreciate the challenging situation here to balance many critical priorities.

Sure, uh good question. Uh, Bobby. Yeah. Hey thanks for the question. So um maybe this is the start, like I said, before we view quality as absolutely critical, um, and we never take anything for granted with stars, we're Restless when it comes to seeking opportunities, to differentiate, um, and we're always focused on delivering the greatest quality experiences and outcomes for our members.

Speaker #20: And we want to help identify solutions that ensure program stability, clarity for industry, and of course the best outcome for beneficiaries. And we do believe there are solutions that can meet those objectives.

You know, as you can appreciate and as you kind of alluded to, given where we sit in the current cycle, as well as the ongoing industry activity, it wouldn't really be appropriate to speculate on final start year 26 results or what might happen for start year 27 or further into the future.

Speaker #20: All that said, I want to be really clear that we remain fully committed to our quality agenda. And we're investing in that more than ever, including in the second half of this year.

[Company Representative] (UnitedHealth Group): As we navigate through the next few months, our preferred approach is to continue to partner with CMS, as we appreciate the challenging situation here to balance many critical priorities. We want to help identify solutions that ensure program stability, clarity for industry, and of course, the best outcome for beneficiaries. We do believe there are solutions that can meet those objectives. With all that said, I want to be really clear that we remain fully committed to our quality agenda, and we're investing in that more than ever, including in the H2 of this year. We're going to do that to support our various quality programs and initiatives for our members and our providers. Thanks for the question.

Speaker #20: And we're going to do that to support our various quality programs and initiatives for our members and our providers. Thanks for the question.

Speaker #19: Thank you. We have time for one more question.

Speaker #4: And our last question will come from Dave Windley with Jefferies.

Speaker #1: Great. Good morning. Thanks for squeezing me in. I wanted to ask a question on Optum Health profitability and the progress you're making there. The margins were pretty comparable sequentially, but well ahead of what the market was expecting.

Speaker #1: I think there was some expectation that margins would seasonally decline through the year. And I wondered if you could comment on what did happen or perhaps what didn't happen in Q2 to allow those margins to hold up.

Recent years as evidenced by 2026 industry scores at the lowest level in about a decade. So, as we navigate through the next few months, you know, our preferred approach is to continue to partner with CMS as we appreciate the challenging situation here to balance, you know, many critical priorities. And we want to help identify solutions that ensure program, stability, Clarity for industry and of course, the best outcome for beneficiaries, and we do believe there are solutions um, that can meet those objectives, you know, all that said, I I want to be really clear that we remain fully committed to our quality agenda.

Stephen Hemsley: Thank you. We have time for one more question.

Steve Hemsley: Thank you. We have time for one more question.

Operator: Our last question will come from Dave Windley with Jefferies.

And we're investing in that more than ever, including in the second half of this year. We're going to do that to support our various quality programs and initiatives for our members and our providers. Thanks for the question. Thank you. We have time for one more question.

Speaker #1: And as part of that, I noticed that the call it the subtraction in your reported to adjusted margin bridge for the PDR appeared to decline and I wondered if that had some influence on the margin in the quarter.

And our last question will come from Dave Windley with Jefferies.

Dave Windley: Great. Good morning. Thanks for squeezing me in. I wanted to ask a question on Optum Health profitability and the progress you're making there. The margins were pretty comparable sequentially, but well ahead of what the market was expecting. I think there was some expectation that margins would seasonally decline through the year. I wondered if you could comment on what did happen or perhaps what didn't happen in Q2 to allow those margins to hold up. As part of that, I noticed that the, call it the subtraction in your reported to adjusted margin bridge for the PDR appeared to decline, and I wondered if that had some influence on the margin in the quarter. Thank you.

Speaker #1: Thank you.

Speaker #19: Sure. Krista.

Speaker #21: Yep. I'll point to just a couple of things that are maybe just different this year. As we've talked in the past, the seasonality really mirrors a risk business.

Great, good morning, thanks for squeezing me in. I wanted to ask a question on Optum Health profitability and the progress you're making there. The margins were pretty comparable sequentially, but well ahead of what the market was expecting. I think there was some expectation that margins would seasonally decline through the year, and I wondered if you could comment on that.

Speaker #21: So the majority, vast majority of our earnings are going to be in the first half of the year versus the second. But a couple of elements that are a little bit different.

Speaker #21: First is just the timing of our restructuring efforts. So in the fourth quarter we laid out plans to restructure the business. We had originally assumed a significant portion of those would be complete in the first half of the year.

You know what, what did happen or perhaps what didn't happen in 2q um to to allow those margins to hold up and as part of that I noticed that the the call it the subtraction in your reported to adjusted margin bridge for the PDR appeared to decline and I wondered if that had some influence on the margin in the quarter, thank you.

Stephen Hemsley: Sure. Krista?

Steve Hemsley: Sure. Krista?

sure, Krista

Speaker #21: And there are a couple of those one in particular that is really shifting into the second half of the year. That does create an impact in second half versus first half.

Krista Nelson: Yep. I'll point to just a couple things that are maybe just different this year. As we've talked in the past, the seasonality really mirrors a risk business. The vast majority of our earnings are going to be in H1 versus H2. A couple elements that are a little bit different. First is just the timing of our restructuring efforts. In Q4, we laid out plans to restructure the business. We had originally assumed a significant portion of those would be complete in H1, and there are a couple of those, one in particular that is really shifting into H2. That does create an impact in H2 versus H1. The second thing I would point to is just investments in the business.

Speaker #21: The second thing I would point to is just investments in the business. As we're launching new clinical or operational initiatives, as we see those successful, we are investing in technology, workflow enhancements to make sure that those are actually durable and scaled across the infrastructure.

Speaker #21: So some investments in the second half of the year. And then third is just I think really being respectful of the trend environment, even though we're seeing some of that moderate in the first half of the year and medical performing slightly better than we would have expected.

Speaker #21: Trends are still well above historical levels and we're being respectful of that.

Krista Nelson: As we're launching new clinical or operational initiatives, as we see those successful, we are investing in technology workflow enhancements to make sure that those are actually durable and scaled across the infrastructure. Some investments in H2. Third is just, I think really being respectful of the trend environment, even though we're seeing some of that moderate in H1 and medical performing slightly better than we would've expected. Trends are still well above historical levels, and we're being respectful of that.

Speaker #19: Wayne. PDR.

Speaker #22: Yeah. Hey Dave. Thanks for the question on the PDR. No, it did not seeing. The one thing I would remind investors to consider is that as we are divesting items that we had in our year-end charge, we'll move the PDR associated with that item along with the benefit that would have been unwound from that.

Yep, I'll point to just a couple things that um are maybe just different this year, you know, as as we've, you know, talked in the past, the seasonality really, um, mirrors, a risk business. So, you know, the majority vast majority of our earnings are going to be in the first half of the Year versus the second but um, a couple elements that are a little bit different. First is just um, the timing of our restructuring efforts. So you know, in the fourth quarter, we laid out plans to re restructure the business we had originally assumed a significant portion of those would be complete in the first half of the year. And there are a couple of those 1 in particular. That is really shifting into the second half of the year, um, that does create an impact in second half versus first half. Um, the second thing I would point to is just investments in the business, you know, as we're launching new clinical, or operational initiatives, um, as we see those uh, success successful. We are investing in technology workflow enhancements to make sure that those are actually durable and scalable the infrastructure. So um, some investments in the second half of the year and then third is just

Speaker #22: So as we continue to execute on that, you'll see that number kind of slowly edge downward. But I don't expect it to change. And our goal is to show you what real durable earnings are, which is why we do the adjustment.

You know, I think really being respectful of the trend environment, even though we're seeing some of that, you know, moderate in the first half of the year and medical performing slightly better than we would have expected. Trends are still well above historical levels and we're, you know, being respectful of that.

Stephen Hemsley: Wayne, PDR?

Steve Hemsley: Wayne, PDR?

Wayne DeVeydt: Yeah. Hey, Dave. Thanks for the question on the PDR. No, it did not impact the durable margins that we're seeing. The one thing I would remind investors to consider is that, as we are divesting items that we had in our year-end charge, we'll move the PDR associated with that item along with the benefit that would've been unwound from that. As we continue to execute on that, you'll see that number kind of slowly edge downward, but I don't expect it to change. Our goal is to show you what real durable earnings are, which is why we do the adjustment.

Speaker #19: Thanks Wayne. And thank you all for joining us today. We appreciate your time and your trust in us as we continue to both improve our performance and modernize our company.

Speaker #19: And I can assure you we will stay restless and urgent as we go forward. Thanks for joining us.

Wayne PDR. Yeah, hey Dave. Thanks for the question on the PDR. Um, no, it did not impact the durable margins that we're seeing the 1 thing. I would remind, um, investors to consider is that as we are devastating items that we had in our year end, uh, charge uh will move the PDR associated with that item along with the benefit that would have been on wound from that. So as we continue to execute on that, you'll see that number kind of slowly, you know, edged downward, but I don't uh uh, I don't expect it to change and our goal is to show you what real durable earnings are, which is why we do the adjustment.

Stephen Hemsley: Thanks, Wayne, thank you all for joining us today. We appreciate your time and your trust in us as we continue to both improve our performance and modernize our company. I can assure you, we will stay restless and urgent as we go forward. Thanks for joining us.

Steve Hemsley: Thanks, Wayne, thank you all for joining us today. We appreciate your time and your trust in us as we continue to both improve our performance and modernize our company. I can assure you, we will stay restless and urgent as we go forward. Thanks for joining us.

Thanks for joining us.

Operator: This does conclude today's conference. We thank you for your participation.

This concludes today's conference. We thank you for your participation.

Q2 2026 UnitedHealth Group Inc Earnings Call

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