Our 2026 approach prioritized margin recovery and product stability with a deliberate trade-off on membership growth, particularly in Medicare and commercial markets. We continue to expect membership attrition and negative margins in 2026, in light of continuing high trend and insufficient funding, with modest margin improvements beginning in 2027. The pricing actions we have previously discussed are materializing as intended, preserving margin while contributing to some moderation and growth. At this point in the year, we expect membership to contract consistent with previous guidance, but centering more around a drop of 1.3 million.
Across Optum, positive first quarter results reflect strengthened operations, continued investment in growth, and changes that make engaging with us easier for patients and provider and clinician partners. A key part of the progress is Optum Health's return to a disciplined, integrated value-based care model. We are improving patient experience and outcomes through efforts to stabilize staffing, increase productivity, improve scheduling, and standardize workflows in both our value-based and fee-for-service models. One example, our West region, where in response to rising patient acuity, we deployed more data-driven, clinically-led navigation in areas such as hospital admission and discharge, skilled nursing facility transitions, and emergency department encounters.
Within our fee-for-service businesses, we've brought more managed structure and accountability, starting with clearer scheduling guidelines, stronger regional leadership, and better data and analytics to match supply and demand. They have already driven a 12% year-over-year increase in patient-facing hours, which is better for both clinicians and patients. For the first quarter, we reported adjusted earnings per share of $7.23, well ahead of our expectations and backed by strong quality metrics, including cash flows and reserves. Total revenues in the quarter were $111.7 billion, reflecting 2% growth year-over-year, driven by disciplined pricing actions and member mix.
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS | FY2026 | greater than $18.25 (raised) |
| AI-related investment | FY2026 | nearly $1.5 billion (on track) |
| UHC Medicare Advantage membership | FY2026 | drop centering around 1.3 million (modestly narrowed) |
| Share repurchases | by end of Q2 2026 | at least $2 billion, initiated earlier (accelerated) |
| Debt-to-capital ratio | year-end 2026 | 40% target (improving) |
| Medical prior authorizations | end of 2026 | reduce by 30% or more |
| Metric | YoY | Note |
|---|---|---|
| Total revenues | +2% to $111.7 billion | disciplined pricing actions and member mix |
| Medical care ratio | 83.9% vs 84.8% in Q1 2025 | pricing discipline, strong medical cost management and favorable reserve development (net prior-year development a little north of $500 million) |
| Operating cost ratio | 13.8% | timing of targeted investments plus roughly $900 million of incentive compensation versus $35 million a year earlier |
| Total domestic membership | 49.1 million vs 49.8 million at year-end 2025 | deliberate trade-off favoring margin recovery over membership growth |
| Operating cash flow | $8.9 billion (1.4x net income) | strong operating results and quality reserves |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Medicare Advantage medical trend | ~7.5% 2025 trend, priced ~10% for 2026 | elevated but in line with pricing; modest favorability in government programs | Stable to slightly favorable |
| Optum Health turnaround | back-to-basics value-based care restructuring | $1.3 billion adjusted earnings, clinical management gains, path to 6%-8% margins | Improving |
| Enterprise AI investment | nearly $1.5 billion planned for 2026 | on track; Avery chatbot, Optum Real, ~2:1 expected return | Expanding |
| Prior authorization reform | identified source of friction | ~95% electronic, ~50% real-time, targeting 30%+ reduction in medical PAs | Progressing |
| Capital deployment | return to historical practices in H2 2026 | buybacks initiated early, $2 billion+ by Q2 | Accelerated |