UnitedHealth Takes $1.6 Billion Hit To Earnings Amid Restructuring

UnitedHealth Group eked out a fourth quarter profit of $10 million despite a $1.6 billion hit to fourth quarter earnings from a large restructuring charge taken as the healthcare giant works on a financial turnaround.

The company, which last year brought back Stephen Hemsley out of retirement to be chief executive officer, is working on a financial turnaround that includes “re-focusing on key markets, products and geographies, aligning pricing discipline to account for higher medical trends and the impact of health care policy changes” and “re-baselining operations at Optum,” the company said Tuesday in its fourth quarter and full-year 2025 earnings report.

“The company completed wide-ranging actions that were included in a fourth quarter charge of $1.6 billion net of taxes, or $1.78 per share,” UnitedHealth, which owns the nation’s largest health insurance company in UnitedHealthcare, and Optum, one of the nation’s largest providers of medical care, said in its earnings report.

UnitedHealth’s fourth quarter net income tumbled to just $10 million, or one penny per share, compared to $5.5 billion in the year-ago period. Meanwhile, UnitedHealth’s full-year net income was $12 billion, or $13.23 per share, compared $14.4 billion, or $15.51 a share in 2025.

The restructuring impact to earnings before income taxes was $2.8 billion and included $799 million in final costs of the historic 2024 cyberattack on UnitedHealth businesses and $2.5 billion in “restructuring and other” costs. Total impact to net earnings was $1.6 billion once $1.2 billion in net income taxes was subtracted.

“Full year 2025 earnings from operations of $19.0 billion included the impact of a $2.8 billion charge,” UnitedHealth said in its earnings report. “This charge reflected the final direct costs associated with cyberattack-related activities, divestitures and business exits, and broader restructuring and other actions including loss contract assessments, real estate rationalization and workforce reductions.”

As one example of “business exits,” UnitedHealthcare has joined rival insurers including CVS Health’s Aetna and Humana in pulling back this year from sales of Medicare Advantage plans in certain markets after years of expanding their geographic footprints. These plans are trying to control higher costs during a period where regulators aren’t expected to increase what the government pays such plans.

Thus, the health insurer is exiting certain markets and expects its Medicare Advantage enrollment to contract by more than 1.1 million older adults, the company said Tuesday. That, along with other market contractions in the company’s commercial risk and Medicaid businesses, will cause total enrollment in all of its medical plans to drop to 47 million this year. Meanwhile, total company revenues are projected to fall 2% in 2026 to about $439 billion, UnitedHealth said in projections released Tuesday morning.

Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.

Health insurers have been hit with higher-than-expected costs and UnitedHealthcare is no exception. UnitedHealthcare’s full year adjusted 2025 medical care ratio, which is the percentage of premium revenue that goes toward medical costs, was 88.9% compared to 85.5% in 2024. Adjusted medical care ratio was more than 91% in the fourth quarter.

Despite the company’s issues, its businesses are growing across the board. UnitedHealth Group’s full year 2025 revenues grew $47.3 billion, or 12% year-over-year, to $447.6 billion, the company said. In the fourth quarter, revenues rose to $113 billion compared to $100.8 billion in the year ago quarter.

At UnitedHealthcare, full year 2025 revenues increased 16%, or $46.7 billion, to $344.9 billion as the company grew enrollment in its health insurance plans. UnitedHealthcare said it served 49.8 million people in 2025, an increase of 415,000 year-over-year.

Meanwhile, Optum revenues were up 8% in the fourth quarter to $70.3 billion and up 7% for the year to $270.6 billion compared to $253 billion at the end of 2024.

“We confronted challenges directly and finished 2025 as a much stronger company, giving us the momentum to better serve those who count on us and continue to improve our core performance,” said Hemsley said in a statement accompanying the earnings report.