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UnitedHealth (UNH) to Post Q2 Earnings: What's in the Offing?

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UnitedHealth Group Inc. (UNH - Free Report) is scheduled to report second-quarter 2021 results on Jul 15, before the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for the company’s second-quarter earnings per share is pegged at $4.40, indicating a decline of 38.2% from the year-ago quarter's reported figure. The consensus mark for revenues stands at $69.22 billion, suggesting growth of 11.4% from the prior-year quarter's reported number.

Key Factors to Note

Revenues from UnitedHealthcare (contributes to 78% of total revenues), the company’s largest segment that sells insurance, are likely to have risen on higher membership in community and senior programs. The company is likely to have added members to Medicare Advantage (MA) plans, Medicaid. Solid insurance sales of dental and vision plans might have aided premium growth. The Zacks Consensus Estimate for revenues is pegged at $54.57 billion, suggesting growth of 11% from the prior-year quarter's reported figure.

In another segment named Optum (22% of revenues), top-line growth is expected to have been driven by higher contribution from its sub-segments OptumHealth and Optum Insight. OptumRx is likely to have shown tepid growth.

Coming to its subsegment OptumHealth, revenues and earnings are likely to have improved on higher revenues per consumer served. This upside might have been led by increased number of people served under value-based care arrangements and the rising acuity of the care services offered by the company. The Zacks Consensus Estimate for revenues is pegged at $11.44 billion, implying growth of 25.2% from the prior-year quarter's reported figure.

Optum Insight's revenues and earnings are likely to have gone up owing to growth in services and technology offerings, and improved productivity. New business wins, contract extensions and pipeline growth in comprehensive managed services are expected to have boosted the top line. The Zacks Consensus Estimate for revenues is pegged at $2.95 billion, hinting at 12.2% growth from the prior-year quarter's reported figure.

Operating cost ratio, which measures the expense incurred in proportion to revenues, is likely to have decreased following the cancellation of the health insurance tax and continued operating efficiency gains. This, in turn, is likely to have been partly offset by business mix, and heavy investment in growth and innovation.

The company’s bottom line is expected to reflect the net unfavorable impact of COVID-19, such as testing and treatment costs. The return of care, which was deferred in 2020 due to the pandemic, might have shot up utilization and claims, eventually.

Earnings Surprise History

The company boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 20.21%. This is depicted in the chart below:

What Our Quantitative Model Predicts

The proven Zacks model does not conclusively predict an earnings beat for UnitedHealth this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: UnitedHealth has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: UnitedHealth carries a Zacks Rank #2, currently.You can see the complete list of today’s Zacks #1 Rank stocks here

Stocks to Consider

Some stocks worth considering from the medical space with the perfect mix of elements to surpass estimates in their upcoming releases are as follows:

Anthem, Inc. (ANTM - Free Report) has an Earnings ESP of +1.13% and is Zacks #3 Ranked, currently. The company’s earnings surpassed estimates in all the preceding four quarters, the average being 2.47%.

Humana Inc. (HUM - Free Report) currently has a Zacks Rank of 3 and an Earnings ESP of +5.13%. Its earnings surpassed estimates in each of the previous four quarters, the average being 9.42%.

The Joint Corp. (JYNT - Free Report) has an Earnings ESP of +150.00% and a Zacks Rank of 3, currently. Its earnings surpassed estimates in three of the last four quarters and missed the mark in one, the average beat being 199.17%.