UnitedHealth Group Inc. forecast a decline in 2026 revenue, the first annual contraction in more than three decades, as the insurer falters in its attempt to rebuild confidence with investors after a stunning fall last year.

The news was the second blow to shareholders in as many days. Late Monday, the U.S. proposed holding payments to private Medicare plans flat next year, a huge disappointment that caused the stock to tumble as much as 10% in after-hours trading.

Shares plunged again Tuesday, falling nearly 20% at midday. The decline erased more than $55 billion in market value.

The Eden Prairie-based health care giant grew aggressively through deals over the past decade, but is now shedding assets in a bid to improve profits. It’s shrinking insurance membership, selling overseas assets and reducing the U.S. presence of its care delivery unit, Optum Health. Revenue is set to drop at both UnitedHealthcare, the company’s insurance arm, and its Optum services division as a result.

“We’ve taken a critical look across all our products and our U.S. market positions, focusing on what is working and what needs more attention and what no longer makes sense for us,” UnitedHealth Chief Executive Officer Stephen Hemsley said on a call with analysts.

Optum Health’s care sites and membership will shrink by about 20%, or 550 locations, with some medical practices being closed or sold to hospitals or providers, Chief Financial Officer Wayne DeVeydt said in an interview.

The unit had been the engine driving profit growth in recent years as the company scooped up doctors offices, surgery centers and other care sites. Optum Health aimed to serve patients on Medicare — both UnitedHealthcare’s plans and its rivals — and take on a share of the premium for those patients. But profit in that segment has evaporated, as new federal rules lower Medicare payments to insurers.

Insurance Losses

Meanwhile, the UnitedHealthcare insurance business expects to lose as many as 2.8 million members, with shrinking enrollment across all its major segments — commercial health plans, Medicare and Medicaid.

DeVeydt said the company now sees Medicare Advantage membership declining by 1.3 million to 1.4 million, a greater number than it previously thought, though it expects to improve margins.

The business now faces the added difficulty this year of eroding government support. Medicare Advantage payment rates will rise by just 0.09% in 2027, far less than the 6% analysts expected. Wall Street had been betting on friendly regulators under the Trump administration to reverse years in which the federal government pulled back on payments.

“The news that we received last night in the advance notice was disappointing,” UnitedHealthcare CEO Tim Noel told analysts.

Overall, UnitedHealth’s revenue for 2026 will be greater than $439 billion, a 2% decline from 2025 and short of analyst estimates. It would be the first annual revenue decrease for UnitedHealth since 1989, according to data compiled by Bloomberg.

The insurer’s earnings outlook for 2026 did come in slightly ahead of Wall Street’s views. Adjusted profit will be greater than $17.75 a share, the company said in a news release, which is 6 cents higher than the average of analyst estimates in a Bloomberg survey.

For the fourth quarter, UnitedHealth posted adjusted earnings per share just a penny above the average estimate by analysts in a Bloomberg survey. The company’s medical-loss ratio, a closely watched gauge of care expenses, was slightly worse than Wall Street expectations. The measure was more favorable after adjustments for restructuring. The company doesn’t typically report an adjusted version of the figure.

The results are likely to disappoint investors who “wanted to see at least a modest beat,” wrote Mizuho Securities USA’s Jared Holz. Piled on top of the Medicare payment surprise, the insurer’s report “will shake investors out of this complex over the short term until more clarity is reached,” he wrote.

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