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UnitedHealth Group (UNH) Q2 Earnings Beat, Boosts '23 EPS View
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UnitedHealth Group Incorporated (UNH - Free Report) reported second-quarter 2023 adjusted earnings of $6.14 per share, which outpaced the Zacks Consensus Estimate by 3.7%. The bottom line advanced 10.2% year over year. Its shares gained 3.6% in the pre-market trading session, reflecting the outperformance.
Revenues improved 16% year over year to $92.9 billion in the quarter under review, attributable to sound contributions made by the UnitedHealthcare and Optum business lines. The top line surpassed the consensus mark by 2.5%.
The quarterly performance was aided by an expanding customer base under UNH’s value-based care arrangements. The solid performance of Optum’s sub-units also contributed to the quarterly results. However, the upside was partly offset by an elevated expense level.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group’s medical care ratio came in at 83.2%, which deteriorated 170 basis points (bps) year over year and matched our estimate.
Operating cost ratio deteriorated 30 bps year over year to 14.9% in the second quarter due to business mix and continued investments with regard to future business growth.
Total operating costs of $84.8 billion escalated 15.9% year over year and came higher than our estimate of $81.6 billion. The year-over-year increase mainly stemmed from elevated medical and operating costs.
UNH reported operating earnings of $8.1 billion, which climbed 13% year over year in the quarter under review.
The net margin of 5.9% deteriorated 40 bps year over year but beat our estimate of 5.8%.
Business Platforms’ Performances
Revenues from the health benefits business of UnitedHealth Group, UnitedHealthcare, rose 13% year over year to $70.2 billion on the back of a growing membership base. The reported figure outpaced the Zacks Consensus Estimate of $69.1 billion and our estimate of $67.9 billion.
Earnings from operations came in at $4.4 billion in the second quarter, which improved 13% year over year and surpassed the consensus mark of $3.9 billion The operating margin remained flat year over year at 6.2%.
Another business line, Optum, reported revenues of $56.3 billion, which climbed 25% year over year and beat the Zacks Consensus Estimate of $54.1 billion as well as our estimate of $54 billion.
Earnings from operations increased 13% year over year to $3.7 billion in the quarter under review but missed the consensus mark of $3.9 billion as well as our estimate of $3.8 billion. The operating margin of 6.6% deteriorated 70 bps year over year.
The Optum segment benefited on the back of solid performance of its sub-units Optum Health, Optum Insight and Optum Rx. Optum Health was aided by catering to an expanding customer base under value-based care arrangements and consistent expansion of care services. While the addition of Change Healthcare provided an impetus to Optum Insight revenues, Optum Rx gained on significant growth in its home delivery, specialty, infusion and community-based pharmacy offerings.
The Uptick in Membership Enrollment
As of Jun 30, 2023, the UnitedHealthcare segment catered to 52.8 million people, which rose 3.1% year over year on the back of higher number of people served with commercial and public sector program offerings. The reported figure fell short of the Zacks Consensus Estimate of 52.9 million but beat our estimate of 52.4 million.
Financial Position (as of Jun 30, 2023)
UnitedHealth Group exited the second quarter with cash and short-term investments of $46.3 billion, which soared 65.8% from the 2022-end level. Total assets of $280.2 billion increased 14% from the figure at 2022 end.
Long-term debt, less of current maturities, amounted to $59.3 billion, up 8.7% from the figure as of Dec 31, 2022. The short-term borrowings and current portion of long-term debt were $6.3 billion.
Total equity of $87.4 billion rose 7.3% from the 2022-end level.
In the reported quarter, return on equity was 26.8%.
Increase in Cash Flows
UnitedHealth Group generated cash flows of $27.4 billion from operations in the first half of 2023, which more than doubled from the prior-year comparable period.
Capital Deployment Update
UNH rewarded $4.8 billion to its shareholders in the form of share repurchases and dividends during the second quarter.
2023 Outlook
On the basis of solid performance exhibited in the first half of 2023, coupled with durable growth and operating forecasts, adjusted net earnings per share (EPS) are presently anticipated within $24.70 and $25.00, compared with the prior guidance of $24.50-$25.00. The mid-point of the revised guidance implies 12% growth from the 2022 figure.
Net EPS are projected to lie between $23.45 and $23.75, compared with the previous view of $23.25-$23.75.
Management had earlier expected revenues between $357 billion and $360 billion this year, the mid-point of which suggested 10.6% growth from the 2022 reported figure. Operating cash flows were estimated within $27-$28 billion for 2023.
Zacks Rank
UnitedHealth Group currently carries a Zacks Rank #3 (Hold).
Upcoming Releases
Here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for BSX’s second-quarter 2023 earnings is 49 cents per share, which indicates an improvement of 11.4% from the year-ago quarter’s reported figure. Boston Scientific’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 1.88%.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) has an Earnings ESP of +6.50% and a Zacks Rank of 3 (Hold), at present. The Zacks Consensus Estimate for REGN’s second-quarter 2023 earnings stands at $9.97 per share, implying 2.1% growth from the year-ago quarter’s reported figure.
Regeneron Pharmaceuticals’ earnings beat estimates in each of the trailing four quarters, the average surprise being 17.06%.
Addus HomeCare Corporation (ADUS - Free Report) currently has an Earnings ESP of +1.61% and a Zacks Rank #3. The Zacks Consensus Estimate for ADUS’s second-quarter 2023 earnings is pegged at 99 cents per share, suggesting a 8.8% rise from the prior-year quarter’s reported number.
Addus HomeCare’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.10%.
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UnitedHealth Group (UNH) Q2 Earnings Beat, Boosts '23 EPS View
UnitedHealth Group Incorporated (UNH - Free Report) reported second-quarter 2023 adjusted earnings of $6.14 per share, which outpaced the Zacks Consensus Estimate by 3.7%. The bottom line advanced 10.2% year over year. Its shares gained 3.6% in the pre-market trading session, reflecting the outperformance.
Revenues improved 16% year over year to $92.9 billion in the quarter under review, attributable to sound contributions made by the UnitedHealthcare and Optum business lines. The top line surpassed the consensus mark by 2.5%.
The quarterly performance was aided by an expanding customer base under UNH’s value-based care arrangements. The solid performance of Optum’s sub-units also contributed to the quarterly results. However, the upside was partly offset by an elevated expense level.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
Q2 Business Performance
UnitedHealth Group’s medical care ratio came in at 83.2%, which deteriorated 170 basis points (bps) year over year and matched our estimate.
Operating cost ratio deteriorated 30 bps year over year to 14.9% in the second quarter due to business mix and continued investments with regard to future business growth.
Total operating costs of $84.8 billion escalated 15.9% year over year and came higher than our estimate of $81.6 billion. The year-over-year increase mainly stemmed from elevated medical and operating costs.
UNH reported operating earnings of $8.1 billion, which climbed 13% year over year in the quarter under review.
The net margin of 5.9% deteriorated 40 bps year over year but beat our estimate of 5.8%.
Business Platforms’ Performances
Revenues from the health benefits business of UnitedHealth Group, UnitedHealthcare, rose 13% year over year to $70.2 billion on the back of a growing membership base. The reported figure outpaced the Zacks Consensus Estimate of $69.1 billion and our estimate of $67.9 billion.
Earnings from operations came in at $4.4 billion in the second quarter, which improved 13% year over year and surpassed the consensus mark of $3.9 billion The operating margin remained flat year over year at 6.2%.
Another business line, Optum, reported revenues of $56.3 billion, which climbed 25% year over year and beat the Zacks Consensus Estimate of $54.1 billion as well as our estimate of $54 billion.
Earnings from operations increased 13% year over year to $3.7 billion in the quarter under review but missed the consensus mark of $3.9 billion as well as our estimate of $3.8 billion. The operating margin of 6.6% deteriorated 70 bps year over year.
The Optum segment benefited on the back of solid performance of its sub-units Optum Health, Optum Insight and Optum Rx. Optum Health was aided by catering to an expanding customer base under value-based care arrangements and consistent expansion of care services. While the addition of Change Healthcare provided an impetus to Optum Insight revenues, Optum Rx gained on significant growth in its home delivery, specialty, infusion and community-based pharmacy offerings.
The Uptick in Membership Enrollment
As of Jun 30, 2023, the UnitedHealthcare segment catered to 52.8 million people, which rose 3.1% year over year on the back of higher number of people served with commercial and public sector program offerings. The reported figure fell short of the Zacks Consensus Estimate of 52.9 million but beat our estimate of 52.4 million.
Financial Position (as of Jun 30, 2023)
UnitedHealth Group exited the second quarter with cash and short-term investments of $46.3 billion, which soared 65.8% from the 2022-end level. Total assets of $280.2 billion increased 14% from the figure at 2022 end.
Long-term debt, less of current maturities, amounted to $59.3 billion, up 8.7% from the figure as of Dec 31, 2022. The short-term borrowings and current portion of long-term debt were $6.3 billion.
Total equity of $87.4 billion rose 7.3% from the 2022-end level.
In the reported quarter, return on equity was 26.8%.
Increase in Cash Flows
UnitedHealth Group generated cash flows of $27.4 billion from operations in the first half of 2023, which more than doubled from the prior-year comparable period.
Capital Deployment Update
UNH rewarded $4.8 billion to its shareholders in the form of share repurchases and dividends during the second quarter.
2023 Outlook
On the basis of solid performance exhibited in the first half of 2023, coupled with durable growth and operating forecasts, adjusted net earnings per share (EPS) are presently anticipated within $24.70 and $25.00, compared with the prior guidance of $24.50-$25.00. The mid-point of the revised guidance implies 12% growth from the 2022 figure.
Net EPS are projected to lie between $23.45 and $23.75, compared with the previous view of $23.25-$23.75.
Management had earlier expected revenues between $357 billion and $360 billion this year, the mid-point of which suggested 10.6% growth from the 2022 reported figure. Operating cash flows were estimated within $27-$28 billion for 2023.
Zacks Rank
UnitedHealth Group currently carries a Zacks Rank #3 (Hold).
Upcoming Releases
Here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Boston Scientific Corporation (BSX - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BSX’s second-quarter 2023 earnings is 49 cents per share, which indicates an improvement of 11.4% from the year-ago quarter’s reported figure. Boston Scientific’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 1.88%.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) has an Earnings ESP of +6.50% and a Zacks Rank of 3 (Hold), at present. The Zacks Consensus Estimate for REGN’s second-quarter 2023 earnings stands at $9.97 per share, implying 2.1% growth from the year-ago quarter’s reported figure.
Regeneron Pharmaceuticals’ earnings beat estimates in each of the trailing four quarters, the average surprise being 17.06%.
Addus HomeCare Corporation (ADUS - Free Report) currently has an Earnings ESP of +1.61% and a Zacks Rank #3. The Zacks Consensus Estimate for ADUS’s second-quarter 2023 earnings is pegged at 99 cents per share, suggesting a 8.8% rise from the prior-year quarter’s reported number.
Addus HomeCare’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.10%.