UnitedHealth Group Incorporated

Good morning and welcome to the United Health Group fourth quarter and full year 2025 earnings conference call. A question and answer session will follow United Health Group's prepared remarks. 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. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference a non-GAAP amount. Reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings reports section of the company's investor relations page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our form 8K, dated January 27, 2026, which may be accessed from the investor relations page of the company's website. I will now turn the conference over to the Chairman and Chief Executive Officer of UnitedHealth Group, Stephen Hemsley.

Thank you and good morning. Thank you for joining us today. This morning, I'll provide updates on the progress our organization has made over the last six months and the momentum that is building in 2026. Tim Noll and Patrick Conway will dive more deeply into how UnitedHealthcare and Optum finished 2025 and our conviction for improved performance in 2026. Wayne Devite will walk through the details of our full year 2025 financial performance and 2026 outlook before we turn to Q&A. We continue to progress and strengthen as we enter 2026. We've taken a critical look across all our products and our U.S. market positions, focusing on what is working, what needs more attention, and what no longer makes sense for us. We are driving greater operational disciplines in all our business practices, leveraging the use of technology and artificial intelligence broadly, and renewing our commitment to innovation, agility, and accountability. We have removed assets that are not aligned with our focus on serving the US health system. We continue to strengthen our management team, leveraging both our internal depth and bringing fresh ideas and talent from outside the organization. These actions and others are intended to improve the value we offer to all those we serve and drive sustainable growth for many years to come. Our people are rising to the challenge before them. We finished 2025 with adjusted earnings per share of $16.35, which was slightly ahead of our expectations. Full year 2025 results exclude a $1.6 billion net of tax and largely non-cash charge, very consistent with what we discussed on our third quarter earnings call. Addressing the elements of this charge was important in setting a solid foundation for returning to the historical earnings quality and growth you've come to expect from us. Wayne will provide further details on both these results and the charge. Looking to 2026, we expect adjusted earnings per share of greater than $17.75 for growth of at least 8.6%. Our initial outlook reflects measured growth across all four of our reporting business segments, with double-digit improvements at UnitedHealthcare and low to high single-digit adjusted growth across our Optum segments. These overall results are tempered by the third year of Medicare funding reductions, ongoing funding shortfalls within our Medicaid our state Medicaid programs, and our historical respect for rising medical cost trends. As expected, improvements will be more evident within UnitedHealthcare in 2026, while at an earlier stage, Optum will take more operational effort and investment and time. At UnitedHealthcare, we successfully repriced the insurance businesses, intentionally rightsizing them to refocus on membership we can best serve on a sustainable basis. In Optum, new leaders are driving operational improvements that translate to more consistent results and better performance visibility. We've taken a critical look at our services and geographies, remaining in markets that are best aligned with our core integrated value-based care purpose. This analysis also led us now to align Optum Financial Services with Optum Insight, where our energies and talents for healthcare technology and financial technology innovation can be brought together to better address the opportunities and potential within these markets. We are clearly embarking on a new age of technology, already transforming the way the world operates, and healthcare must participate carefully and fully. We plan to be a leader in that movement. We expect 2026 to be a year of focus and execution, an important one in the history of our company. We have emerged strongly from challenging periods in our past and are committed to that course today. Our team is showing great resilience and energy, and we believe strongly the steps we're taking will pay off. With that, I'll turn it over to Tim. Thanks, Steve.

UnitedHealthcare finished 2025 having made progress to more effectively serve our members and network partners, another important element in building sustainable growth. We close the year with medical care patterns in each business in line with our updated outlook and ultimately supportive of our pricing decisions for 2026. With that, I will briefly walk through each business. Starting with Medicare, the 2025 medical cost trend was in line with our expectation of approximately 7.5 percent and supports our 2026 trend expectation of 10 percent. This reflects consistently elevated utilization in addition to increases in physician fee schedules and the continuation of higher service intensity per care encounter. As part of our efforts to address elevated trends and funding cuts, We plan for some Medicare Advantage membership contraction in 2026. We now expect UHC Medicare Advantage contraction will be in the range of 1.3 million to 1.4 million members for the full year, including group, individual, and dual special needs plans. These are greater losses than originally anticipated as competitive market dynamics drove higher than expected planned shopping during the intensely competitive annual enrollment period. Our 2026 approach favored margin recovery, and these membership trends are a result of these actions. We similarly positioned our Medicare supplement and standalone Part D segments, and as a result of the totality of actions taken across UHC Medicare, we expect an improvement in Medicare margins of approximately 50 basis points from 2025. Looking briefly to 2027, the advance notice published yesterday simply doesn't reflect the reality of medical utilization and cost trends. We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors benefits and access to care. That would be a deeply unfortunate result for a program that already is under funding pressure from the previous despite its track record of success serving seniors and taxpayers. Turning to Medicaid. We continue to expect this business to see incremental pressure in 2026, largely driven by state funding shortfalls. We have received some rate relief, but still anticipate the mismatch between rate and acuity to pressure performance in 2026. While we hope for further improvement in 2027. We expect Medicaid membership contraction of approximately 565,000 to 715,000 people, which includes DSNP members, due to reduced Medicaid eligibility combined with the exit from one state. We took important steps in our commercial pricing and cost management efforts during the second half of this year. Nearly all of our employer group and fully insured pricing align with continued increases and care activity for 2026. In the individual ACA market, we repriced nearly all states in response to higher medical trends and the elevated needs of ACA beneficiaries in 2025. These actions were necessary to ensure a sustainable foundation in these plans and enable us to maintain our participation in all the states we served in 2025. We are working with CMS on solutions to address the consumer affordability challenge given the unfolding dynamics in the ACA marketplace. As we announced last week, we have voluntarily pledged to rebate ACA market profits back to our ACA customers this year as policymakers work to determine how to improve affordability in this marketplace. We expect both fully insured group and individual enrollment to contract and be partially offset by continued momentum in our group's self-funded offerings. For 2026 overall, our strategic focus on margin recovery through product repositioning and repricing efforts enables us to estimate approximately 13% adjusted operating earnings growth across all of UHC, principally from the improvement in serving commercial and Medicare market needs. These actions should expand operating earning margins for United Healthcare by 40 basis points and are expected to result in membership contraction of 2.3 to 2.8 million. The expected contraction in commercial membership is in line with our plans. While this will drive margin expansion in 2026, we still anticipate operating. Operating just slightly below our historical margin range until 2027. Our UHC recovery effort is being supported by steady efficiency gains as we advance AI and machine learning capabilities across our businesses. We anticipate operating cost reductions of nearly $1 billion in 2026, many AI enabled, and importantly, resulting in higher customer experience and satisfaction at a lower cost. Over 80% of calls from members leverage AI tools to help answer members' questions faster and more accurately. This enables our advocates to focus more time on a better service experience for individuals. Now I'll turn it over to Patrick Conway, CEO of Optum.