UNH beat earnings by deliberately shedding 1 million Medicare Advantage members. Here's my take.

Looking at UNH's Q1 numbers this morning and something really jumped out at me. Everyone was laser-focused on their medical care ratio (MCR) to see if they could actually control costs, and they did — they came in at 83.9% vs the 85.5% Wall Street expected. The stock jumped like 8% on the news. (As of now) But the "how" is the part that gets interesting. It wasn't just them getting medical costs magically under control. They actively decided to shrink. They shed about 965,000 Medicare Advantage members in Q1 alone, and are projecting to lose 1.3 million for the full year. Basically, they jacked up premiums on unprofitable contracts knowing people would leave. And tbh, it worked. Even with a million fewer members, their revenue actually went up by $1.7 billion and operating margins expanded 40 bps. They are literally making more money by serving fewer, more profitable people. It kind of flips the bear case that they were stuck with bad value-based care bets and runaway medical inflation. They found an exit ramp by shrinking. Obviously the question now is how long they can keep shedding people before the core stabilizes. You can only fire your worst customers for so long. But ngl, pulling off a margin recovery this fast is pretty wild. Anyway, if you're curious about the exact numbers, I put my full notes here: https://dullbusiness.substack.com/p/unh-q1-2026-the-insurer-that-fixed