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UnitedHealth Beats on Q3 Earnings, Raises View: ETFs to Gain
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The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported better-than-expected third-quarter 2023 results. Earnings and revenues breezed past the Zacks Consensus Estimate. The company lifted the lower end of its full-year earnings guidance. UNH shares rose 2.6% on the day.
Investors can 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 $6.56, topping the Zacks Consensus Estimate of $6.33 and increasing 13.3% from the year-ago quarter. Revenues grew 14.2% year over year to $92.4 billion and were above the estimated $91.4 billion. The growth marks the company's seventh consecutive quarter of double-digit revenue increase. Solid results were again powered by double-digit growth in Optum and UnitedHealthcare.
Medical ratio (a measure of the percentage of premiums paid out for medical services) rose to 82.3% from 81.6% in the year-ago quarter due to an increase in outpatient care, primarily serving seniors, and business mix (read: Cash-Cow ETFs for Long-Term Growth & Income).
UNH added 55,000 Medicare Advantage members from Q2, while the number of people served under Medicaid fell by 290,000 to 8.065 million amid eligibility redeterminations. Domestic commercial customers rose by 75,000.
The health insurer raised the lower end of its 2023 adjusted earnings per share guidance from $24.70-$25.00 to $24.85-$25.00. Notably, UnitedHealth is among the largest players in the Medicare Advantage market, where private insurers offer an alternative to the original Medicare — the federal government's health insurance plan for people aged 65 and older or those with certain disabilities.
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 68 securities in its basket. UNH occupies the top position with a 24.8% share.
iShares U.S. Healthcare Providers ETF has amassed $885.5 million in its asset base, while volume is light at about 16,000 shares per day, on average. It charges 40 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
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 third position at 11.9% share.
Harbor Health Care ETF has accumulated $4.5 million in its asset base since its debut last November while trading in an average daily volume of 500 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 65 securities in its basket, with UnitedHealth taking the second spot at 10.1% of the assets. Pharma, healthcare providers & services and healthcare equipment & supplies take the largest share at 31.9%, 23.1% and 18% share, respectively, from a sector look (read: Dow ETF in Focus Ahead of Q3 Earnings).
Health Care Select Sector SPDR Fund has AUM of $38.5 billion in its asset base and trades in a heavy volume of around 9 million shares. The expense ratio comes in at 0.10%. XLV has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF offers exposure to 115 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 second firm, accounting for 10% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.9%, followed by biotech (18.4%) and healthcare equipment (17.3%).
iShares U.S. Healthcare ETF has amassed $3.1 billion in its asset base, while charging 40 bps in annual fees. It trades in a moderate volume of around 43,000 shares a day and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 412 stocks in its basket. Of these, UnitedHealth takes the top spot with an 8.5% allocation. Pharma takes the largest share at 28.1%, while biotech and healthcare equipment round off the top three spots (see: all the Healthcare ETFs here).
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $16.5 billion and an average daily volume of about 520,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.
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UnitedHealth Beats on Q3 Earnings, Raises View: ETFs to Gain
The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported better-than-expected third-quarter 2023 results. Earnings and revenues breezed past the Zacks Consensus Estimate. The company lifted the lower end of its full-year earnings guidance. UNH shares rose 2.6% on the day.
Investors can 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 $6.56, topping the Zacks Consensus Estimate of $6.33 and increasing 13.3% from the year-ago quarter. Revenues grew 14.2% year over year to $92.4 billion and were above the estimated $91.4 billion. The growth marks the company's seventh consecutive quarter of double-digit revenue increase. Solid results were again powered by double-digit growth in Optum and UnitedHealthcare.
Medical ratio (a measure of the percentage of premiums paid out for medical services) rose to 82.3% from 81.6% in the year-ago quarter due to an increase in outpatient care, primarily serving seniors, and business mix (read: Cash-Cow ETFs for Long-Term Growth & Income).
UNH added 55,000 Medicare Advantage members from Q2, while the number of people served under Medicaid fell by 290,000 to 8.065 million amid eligibility redeterminations. Domestic commercial customers rose by 75,000.
The health insurer raised the lower end of its 2023 adjusted earnings per share guidance from $24.70-$25.00 to $24.85-$25.00. Notably, UnitedHealth is among the largest players in the Medicare Advantage market, where private insurers offer an alternative to the original Medicare — the federal government's health insurance plan for people aged 65 and older or those with certain disabilities.
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 68 securities in its basket. UNH occupies the top position with a 24.8% share.
iShares U.S. Healthcare Providers ETF has amassed $885.5 million in its asset base, while volume is light at about 16,000 shares per day, on average. It charges 40 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
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 third position at 11.9% share.
Harbor Health Care ETF has accumulated $4.5 million in its asset base since its debut last November while trading in an average daily volume of 500 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 65 securities in its basket, with UnitedHealth taking the second spot at 10.1% of the assets. Pharma, healthcare providers & services and healthcare equipment & supplies take the largest share at 31.9%, 23.1% and 18% share, respectively, from a sector look (read: Dow ETF in Focus Ahead of Q3 Earnings).
Health Care Select Sector SPDR Fund has AUM of $38.5 billion in its asset base and trades in a heavy volume of around 9 million shares. The expense ratio comes in at 0.10%. XLV 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 115 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 second firm, accounting for 10% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.9%, followed by biotech (18.4%) and healthcare equipment (17.3%).
iShares U.S. Healthcare ETF has amassed $3.1 billion in its asset base, while charging 40 bps in annual fees. It trades in a moderate volume of around 43,000 shares a day and has a Zacks ETF Rank #2 (Buy) 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 412 stocks in its basket. Of these, UnitedHealth takes the top spot with an 8.5% allocation. Pharma takes the largest share at 28.1%, while biotech and healthcare equipment round off the top three spots (see: all the Healthcare ETFs here).
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $16.5 billion and an average daily volume of about 520,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.