UnitedHealth has posted a higher than anticipated outlook for its current year, but the prospect of a underwhelming rate increases for 2027 Medicare Advantage plans clouded the forecast, presenting fresh challenges for a company already grappling with elevated medical costs and a nationwide backlash against the wider health insurance industry.

The U.S. healthcare giant said it expects full-year 2026 adjusted earnings per share to be greater than $17.75, above Bloomberg consensus estimates of $17.69.

Faced with a mismatch between payments rates and medical services expenses, UnitedHealth has been reducing Medicare Advantage offerings for older adults. On Monday, the U.S. outlined a plan to increase the average rate of payments to private insurers next year to 0.09% for the Medicare Advantage plans they offer, although this was well below Wall Street estimates.

Shares of UnitedHealth slipped by more than 12% in premarket U.S. trading on Tuesday.

The annual consolidated medical care ratio at UnitedHealth is also anticipated to be 88.8%, plus or minus 50 basis points. It added that this would be an improvement from 2025’s medical care ratio of 89.1%, and “reflective of repricing efforts across the enterprise.”

Stripping out a negative from loss contracts, the adjusted medical care ratio — a tracker of the premiums shelled out on medical care — was 88.9% last year. In 2024, the ratio was 85.5%.

Medicare funding reductions and changes from the Inflation Reduction Act, combined with accelerating medical cost trends, accounted for the increase, UnitedHealth said.

Increased utilization of government-backed healthcare plans, fueled by behavioral health services and specialty drugs, has weighed on UnitedHealth’s earnings for more than two years.

Fourth-quarter adjusted per-share income at the company stood at $2.11, down from $6.81 a year earlier. Analysts had anticipated $2.10.