UNH to Cut 1M Medicare Advantage Members in 2026 Amid Cost Pressures
UnitedHealth Group Incorporated (UNH) is set to reduce its Medicare Advantage membership by approximately 1 million in 2026, a strategic move to counterbalance increasing medical costs and decreasing government funding. This news comes as the company's new CEO, Stephen Hemsley, returns to the helm after a period of leadership changes and challenges.
UNH's Q3 earnings report showed strong growth with revenues of $103.86 billion, a 12.24% increase year-over-year. Despite a decline in non-GAAP EPS to $2.92 (-59% YoY), the results beat both top and bottom line estimates. The company is now trading at a positive forward EV/EBITDA ratio of 15.29x and a 2-year forward EV/EBITDA ratio of 12.65x, indicating a potential contraction of around 17.26%.
Analysts have responded positively to these developments. An author has upgraded UNH's rating to 'Buy' due to its anticipated operational turnaround and significant discount to its historic valuation. The author estimates an upside potential of approximately 23.66% over the next 12-18 months. UNH's stock gained over 50% in less than 3 months following the upgrade in August 2025.
UNH is expected to drive solid operating earnings growth and margin improvement in 2026, with further progress anticipated in 2027. As the debt-to-capital ratio trends closer to 40% by 2H 2026, the company may reinstate historical capital deployment practices such as buybacks and strategic acquisitions. Investors should keep a close eye on UNH's strategic membership reduction and its potential impact on the company's future growth and profitability.
