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UnitedHealth's Solid Q4 Earnings Put These ETFs in Focus

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The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported better-than-expected fourth-quarter 2021 results, breezing past the Zacks Consensus Estimate for both earnings and revenues. The company reaffirmed its full-year earnings (read: Dow ETF in Focus Going Into Q4 Earnings Announcements).

Following the solid results, UNH shares added 0.3% at the close of yesterday’s trading session. Investors could tap this opportune moment with ETFs having the largest allocation to this health insurance giant such as iShares U.S. Healthcare Providers ETF (IHF - Free Report) , iShares Evolved U.S. Healthcare Staples ETF (IEHS - 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 $4.48, topping the Zacks Consensus Estimate of $4.30 and improved from the year-ago earnings of $2.52. Revenues grew 12% year over year to $73.7 billion and edged past the estimated $73 billion. The company saw double-digit revenue growth in both its core insurance business and Optum segment (see: all the Healthcare ETFs here).

UnitedHealth signed up greater numbers of members in the fourth quarter while keeping costs at check amid the rapidly shifting COVID-19 pandemic. Medical ratio (a measure of the percentage of premiums paid out for medical services) increased to 83.7% from 82.8% in Q3.

The health insurer reiterated its revenue guidance of $317-$320 billion and adjusted earnings per share view of $21.10-$21.60. The Zacks Consensus Estimate is pegged at $21.70 for earnings per share and $315.8 billion for revenues in 2022.

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 70 securities in its basket, and UNH occupies the top position with a 22.6% share.

iShares U.S. Healthcare Providers ETF has amassed $1.3 billion in its asset base, while volume is light at about 15,000 shares per day, on average. It charges 42 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares Evolved U.S. Healthcare Staples ETF (IEHS - Free Report)

iShares Evolved U.S. Healthcare Staples ETF is an actively managed ETF employs data science techniques to identify companies with exposure to the health-care staples sector. It holds 153 stocks in its basket, with UnitedHealth taking the top spot at 13.4%.

iShares Evolved U.S. Healthcare Staples ETF has accumulated $41 million in its asset base and sees a meager volume of 4,000 shares. It charges 18 bps in annual fees (read: 5 ETF Zones Outperforming to Start 2022).

Health Care Select Sector SPDR Fund (XLV - Free Report)

Health Care Select Sector SPDR Fund is the most-popular health care ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with UnitedHealth taking the second spot at 8.7% of the assets. Pharma, and health care equipment and supplies take the largest share at 28.4% and 22% share, respectively, from a sector look, while health care providers and services, life sciences tools & services, and biotech have double-digit exposure each.

This fund manages nearly $35.2 billion in its asset base and trades in heavy volume of around 11.7 million shares. The expense ratio comes in at 0.12%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

iShares U.S. Healthcare ETF (IYH - Free Report)

iShares U.S. Healthcare ETF offers exposure to 114 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Dow Jones U.S. Health Care Index. Here again, UnitedHealth is the second firm accounting for 8.4% of the total assets. In terms of industrial exposure, pharma takes the top spot at 28.5%, followed by health care equipment (20.9%) and biotech (16%).

iShares U.S. Healthcare ETF has amassed $3.2 billion in its asset base, while charging 41 bps in annual fees. It trades in a moderate volume of around 53,000 shares a day and has a Zacks ETF Rank #1 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 446 stocks in its basket. Of these, UnitedHealth takes the second spot with 7.5% allocation. Pharma takes the largest share at 25%, while health care equipment and biotech round off the top three spots.

Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $16.6 billion and an average daily volume of about 247,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.