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The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported better-than-expected fourth-quarter 2022 results, breezing past the Zacks Consensus Estimate for earnings. Revenues were on par with estimates. The company maintained its full-year earnings guidance.
Despite robust results, UNH shares dropped 1.2% on the day. Investors could tap the opportunity by investing in ETFs having the largest allocation to this health insurance giant. These include iShares U.S. Healthcare Providers ETF (IHF - Free Report) , Harbor Health Care ETF (MEDI - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) and Vanguard Health Care ETF (VHT - Free Report) .
Earnings in Focus
Earnings per share came in at $5.34, topping the Zacks Consensus Estimate of $5.17 and increasing 19.2% from the year-ago quarter. Revenues grew 12.3% year over year to $82.8 billion and were in line with the estimated $82.8 billion. The revenue growth marks the company's fourth consecutive quarter of double-digit revenue increases. Solid results were once again powered by double-digit revenue gains from its Optum division (see: all the Healthcare ETFs here).
UnitedHealthcare added 70,000 Medicare Advantage members and 165,000 Medicaid members during the quarter, while commercial membership grew 130,000. Medical ratio (a measure of the percentage of premiums paid out for medical services) dropped to 82.8% from 83.7% in the year-ago quarter.
The health insurer reiterated its 2023 guidance for revenues in the range of $357-$360 billion and earnings per share in the range of $24.40-$24.90 established at its Nov 29 Investor Conference. The Zacks Consensus Estimate is pegged at $359.7 billion for revenues and $24.87 for earnings per share.
ETFs in Focus
Let’s delve into each ETF below:
iShares U.S. Healthcare Providers ETF (IHF - Free Report)
iShares U.S. Healthcare Providers ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 69 securities in its basket, and UNH occupies the top position with a 21.2% share.
iShares U.S. Healthcare Providers ETF has amassed $1.4 billion in its asset base, while volume is light at about 49,000 shares per day, on average. It charges 39 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Invest in Defensive ETFs as Recession Fear Grows in 2023).
Harbor Health Care ETF invests primarily in equity securities principally engaged in the research, development, production, or distribution of products and services related to the healthcare industry. It holds 34 stocks in its basket, with UNH taking the top position at 11.9% share.
Harbor Health Care ETF has accumulated $3.5 million in its asset base since its debut in November while trading in an average daily volume of 5,000 shares. It charges 80 bps in annual fees.
Health Care Select Sector SPDR Fund is the most-popular healthcare ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with UnitedHealth taking the top spot at 9.1% of the assets. Pharma, healthcare providers & services, and healthcare equipment & supplies take the largest share at 30.6%, 22.4% and 18.6% share, respectively, from a sector look (read: 6 Sector ETFs That Show Promise After December Jobs Data).
Health Care Select Sector SPDR Fund has AUM of $41.6 billion in its asset base and trades in a heavy volume of around 7 million shares. The expense ratio comes in at 0.10%. XLV has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF offers exposure to 113 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here again, UnitedHealth is the top firm accounting for 8.7% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.6%, followed by healthcare equipment (18.1%) and biotech (18%).
iShares U.S. Healthcare ETF has amassed $3.3 billion in its asset base, while charging 39 bps in annual fees. It trades in a moderate volume of around 46,000 shares a day and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 420 stocks in its basket. Of these, UnitedHealth takes the top spot with an 8.5% allocation. Pharma takes the largest share at 28%, while biotech and healthcare equipment round off the top three spots.
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $17.3 billion and an average daily volume of about 236,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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UnitedHealth Beats Q4 Earnings: ETFs in Focus
The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported better-than-expected fourth-quarter 2022 results, breezing past the Zacks Consensus Estimate for earnings. Revenues were on par with estimates. The company maintained its full-year earnings guidance.
Despite robust results, UNH shares dropped 1.2% on the day. Investors could tap the opportunity by investing in ETFs having the largest allocation to this health insurance giant. These include iShares U.S. Healthcare Providers ETF (IHF - Free Report) , Harbor Health Care ETF (MEDI - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) and Vanguard Health Care ETF (VHT - Free Report) .
Earnings in Focus
Earnings per share came in at $5.34, topping the Zacks Consensus Estimate of $5.17 and increasing 19.2% from the year-ago quarter. Revenues grew 12.3% year over year to $82.8 billion and were in line with the estimated $82.8 billion. The revenue growth marks the company's fourth consecutive quarter of double-digit revenue increases. Solid results were once again powered by double-digit revenue gains from its Optum division (see: all the Healthcare ETFs here).
UnitedHealthcare added 70,000 Medicare Advantage members and 165,000 Medicaid members during the quarter, while commercial membership grew 130,000. Medical ratio (a measure of the percentage of premiums paid out for medical services) dropped to 82.8% from 83.7% in the year-ago quarter.
The health insurer reiterated its 2023 guidance for revenues in the range of $357-$360 billion and earnings per share in the range of $24.40-$24.90 established at its Nov 29 Investor Conference. The Zacks Consensus Estimate is pegged at $359.7 billion for revenues and $24.87 for earnings per share.
ETFs in Focus
Let’s delve into each ETF below:
iShares U.S. Healthcare Providers ETF (IHF - Free Report)
iShares U.S. Healthcare Providers ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 69 securities in its basket, and UNH occupies the top position with a 21.2% share.
iShares U.S. Healthcare Providers ETF has amassed $1.4 billion in its asset base, while volume is light at about 49,000 shares per day, on average. It charges 39 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Invest in Defensive ETFs as Recession Fear Grows in 2023).
Harbor Health Care ETF (MEDI - Free Report)
Harbor Health Care ETF invests primarily in equity securities principally engaged in the research, development, production, or distribution of products and services related to the healthcare industry. It holds 34 stocks in its basket, with UNH taking the top position at 11.9% share.
Harbor Health Care ETF has accumulated $3.5 million in its asset base since its debut in November while trading in an average daily volume of 5,000 shares. It charges 80 bps in annual fees.
Health Care Select Sector SPDR Fund (XLV - Free Report)
Health Care Select Sector SPDR Fund is the most-popular healthcare ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with UnitedHealth taking the top spot at 9.1% of the assets. Pharma, healthcare providers & services, and healthcare equipment & supplies take the largest share at 30.6%, 22.4% and 18.6% share, respectively, from a sector look (read: 6 Sector ETFs That Show Promise After December Jobs Data).
Health Care Select Sector SPDR Fund has AUM of $41.6 billion in its asset base and trades in a heavy volume of around 7 million shares. The expense ratio comes in at 0.10%. XLV has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF (IYH - Free Report)
iShares U.S. Healthcare ETF offers exposure to 113 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here again, UnitedHealth is the top firm accounting for 8.7% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.6%, followed by healthcare equipment (18.1%) and biotech (18%).
iShares U.S. Healthcare ETF has amassed $3.3 billion in its asset base, while charging 39 bps in annual fees. It trades in a moderate volume of around 46,000 shares a day and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Health Care ETF (VHT - Free Report)
Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 420 stocks in its basket. Of these, UnitedHealth takes the top spot with an 8.5% allocation. Pharma takes the largest share at 28%, while biotech and healthcare equipment round off the top three spots.
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $17.3 billion and an average daily volume of about 236,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.