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UnitedHealth Group (UNH) Q4 Earnings Beat on Membership Growth
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UnitedHealth Group Incorporated (UNH - Free Report) reported fourth-quarter 2023 adjusted earnings of $6.16 per share, which beat the Zacks Consensus Estimate by 3%. The bottom line rose 15.4% year over year.
Revenues amounted to $94.4 billion, which advanced 14.1% year over year in the quarter under review on the back of strong performance in its UnitedHealthcare and Optum business lines. The top line outpaced the consensus mark by 2.6%.
The quarterly performance was aided by a growing customer base under UNH’s value-based care arrangements. The consistent growth of the services businesses also contributed to the quarterly results. However, the upside was partly offset by a significant increase in medical costs.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
The medical care ratio of UnitedHealth Group deteriorated 220 basis points (bps) year over year to 85% in the fourth quarter, which came higher than the Zacks Consensus Estimate of 84% and our estimate of 83.4%.
The operating cost ratio of 14.1% improved 160 bps year over year.
Total operating costs were $86.7 billion, which escalated 14.3% year over year due to an increase in medical and operating expenses. The figure came higher than our estimate of $82.5 billion.
UNH’s operating earnings improved 11.6% year over year to $7.7 billion. The net margin of 5.8% remained flat year over year in the quarter under review.
Performance of Business Platforms in Details
The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $70.8 billion in the fourth quarter. The figure rose 12.3% year over year on the back of membership growth and surpassed the Zacks Consensus Estimate of $68.6 billion and our estimate of $68.3 billion.
Earnings from operations advanced 6.5% year over year to $3.1 billion but fell short of the consensus mark of $3.2 billion. The operating margin of 4.4% deteriorated 30 bps year over year.
Revenues in the Optum business line were $59.5 billion, which climbed 24.3% year over year in the quarter under review. The figure outpaced the Zacks Consensus Estimate of $57.1 billion and our estimate of $56.4 billion.
Earnings from operations of $4.6 billion grew 15.4% year over year and beat the consensus mark of $4.5 billion. The operating margin deteriorated 60 bps year over year to 7.7%.
The Optum segment was aided by strong contributions from the sub-units Optum Health, Optum Insight and Optum Rx. While Optum Health benefited on the back of an expanding customer base under value-based care arrangements, the addition of Change Healthcare and enhanced technology-enabled offerings drove Optum Insight’s revenues. Meanwhile, Optum Rx gained from new client additions as well as growth in its specialty and community-based pharmacy offerings.
Increase in Membership
The UnitedHealthcare business served 52.8 million people as of Dec 31, 2023, which increased 2% year over year driven by membership growth in its domestic commercial and Medicare Advantage businesses. However, the figure lagged the Zacks Consensus Estimate of 53.1 million and our estimate of 53.4 million.
Financial Position (as of Dec 31, 2023)
UnitedHealth Group exited the fourth quarter with cash and short-term investments of $29.6 billion, which rose 6.2% from the 2022-end level. Total assets of $273.7 billion grew 11.4% from the figure at 2022 end.
Long-term debt, less of current maturities, amounted to $58.3 billion, which increased 6.9% from the figure as of Dec 31, 2022. The short-term borrowings and current portion of long-term debt were $4.3 billion.
Total equity of $94.4 billion advanced 15.9% from the figure at 2022 end.
Return on equity for 2023 was 27%.
Rise in Cash Flows
UnitedHealth Group generated operating cash flows of $29.1 billion for 2023, which advanced 10.9% from the 2022 level.
Capital Deployment Update
UNH rewarded $14.8 billion to its shareholders in the form of share repurchases and dividends during 2023.
2024 Outlook Affirmed
UnitedHealth Group maintains its 2024 targets, excluding the potential impacts from the pending divestiture of its Brazil operations that is likely to conclude in the first half of 2024.
Management forecasts adjusted net earnings per share within $27.50 and $28.00, the mid-point of which indicates an improvement of 10.5% from the 2023 figure of $25.12.
Revenues are estimated to lie between $400 billion and $403 billion in 2024, the mid-point of which suggests 8% growth from the 2023 figure of $371.6 billion. Operating cash flows are projected within $30-$31 billion.
Zacks Rank
UnitedHealth Group currently has a Zacks Rank #4 (Sell).
Upcoming Releases
Here are three other companies from the Medical space that are likely to report their respective quarterly earnings soon.
The Zacks Consensus Estimate for ADMA’s fourth-quarter 2023 earnings is 2 cents per share. A loss of 6 cents per share was reported in the prior-year quarter. ADMA Biologics’ earnings beat estimates in three of the trailing four quarters and matched the mark once, the average surprise being 63.57%.
Novo Nordisk A/S (NVO - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2 (Buy), at present. The Zacks Consensus Estimate for NVO’s fourth-quarter 2023 earnings is 65 cents per share, implying 54.8% growth from the year-ago quarter’s reported figure.
Novo Nordisk’s earnings beat estimates in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 0.58%.
Lantheus Holdings, Inc. (LNTH - Free Report) currently has an Earnings ESP of +6.27% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for LNTH’s fourth-quarter 2023 earnings is pegged at $1.44 per share, suggesting an 5.1% rise from the prior-year quarter’s reported number.
Lantheus’ earnings beat estimates in each of the trailing four quarters, the average surprise being 20.95%.
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UnitedHealth Group (UNH) Q4 Earnings Beat on Membership Growth
UnitedHealth Group Incorporated (UNH - Free Report) reported fourth-quarter 2023 adjusted earnings of $6.16 per share, which beat the Zacks Consensus Estimate by 3%. The bottom line rose 15.4% year over year.
Revenues amounted to $94.4 billion, which advanced 14.1% year over year in the quarter under review on the back of strong performance in its UnitedHealthcare and Optum business lines. The top line outpaced the consensus mark by 2.6%.
The quarterly performance was aided by a growing customer base under UNH’s value-based care arrangements. The consistent growth of the services businesses also contributed to the quarterly results. However, the upside was partly offset by a significant increase in medical costs.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
Q4 Business Performance
The medical care ratio of UnitedHealth Group deteriorated 220 basis points (bps) year over year to 85% in the fourth quarter, which came higher than the Zacks Consensus Estimate of 84% and our estimate of 83.4%.
The operating cost ratio of 14.1% improved 160 bps year over year.
Total operating costs were $86.7 billion, which escalated 14.3% year over year due to an increase in medical and operating expenses. The figure came higher than our estimate of $82.5 billion.
UNH’s operating earnings improved 11.6% year over year to $7.7 billion. The net margin of 5.8% remained flat year over year in the quarter under review.
Performance of Business Platforms in Details
The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $70.8 billion in the fourth quarter. The figure rose 12.3% year over year on the back of membership growth and surpassed the Zacks Consensus Estimate of $68.6 billion and our estimate of $68.3 billion.
Earnings from operations advanced 6.5% year over year to $3.1 billion but fell short of the consensus mark of $3.2 billion. The operating margin of 4.4% deteriorated 30 bps year over year.
Revenues in the Optum business line were $59.5 billion, which climbed 24.3% year over year in the quarter under review. The figure outpaced the Zacks Consensus Estimate of $57.1 billion and our estimate of $56.4 billion.
Earnings from operations of $4.6 billion grew 15.4% year over year and beat the consensus mark of $4.5 billion. The operating margin deteriorated 60 bps year over year to 7.7%.
The Optum segment was aided by strong contributions from the sub-units Optum Health, Optum Insight and Optum Rx. While Optum Health benefited on the back of an expanding customer base under value-based care arrangements, the addition of Change Healthcare and enhanced technology-enabled offerings drove Optum Insight’s revenues. Meanwhile, Optum Rx gained from new client additions as well as growth in its specialty and community-based pharmacy offerings.
Increase in Membership
The UnitedHealthcare business served 52.8 million people as of Dec 31, 2023, which increased 2% year over year driven by membership growth in its domestic commercial and Medicare Advantage businesses. However, the figure lagged the Zacks Consensus Estimate of 53.1 million and our estimate of 53.4 million.
Financial Position (as of Dec 31, 2023)
UnitedHealth Group exited the fourth quarter with cash and short-term investments of $29.6 billion, which rose 6.2% from the 2022-end level. Total assets of $273.7 billion grew 11.4% from the figure at 2022 end.
Long-term debt, less of current maturities, amounted to $58.3 billion, which increased 6.9% from the figure as of Dec 31, 2022. The short-term borrowings and current portion of long-term debt were $4.3 billion.
Total equity of $94.4 billion advanced 15.9% from the figure at 2022 end.
Return on equity for 2023 was 27%.
Rise in Cash Flows
UnitedHealth Group generated operating cash flows of $29.1 billion for 2023, which advanced 10.9% from the 2022 level.
Capital Deployment Update
UNH rewarded $14.8 billion to its shareholders in the form of share repurchases and dividends during 2023.
2024 Outlook Affirmed
UnitedHealth Group maintains its 2024 targets, excluding the potential impacts from the pending divestiture of its Brazil operations that is likely to conclude in the first half of 2024.
Management forecasts adjusted net earnings per share within $27.50 and $28.00, the mid-point of which indicates an improvement of 10.5% from the 2023 figure of $25.12.
Revenues are estimated to lie between $400 billion and $403 billion in 2024, the mid-point of which suggests 8% growth from the 2023 figure of $371.6 billion. Operating cash flows are projected within $30-$31 billion.
Zacks Rank
UnitedHealth Group currently has a Zacks Rank #4 (Sell).
Upcoming Releases
Here are three other companies from the Medical space that are likely to report their respective quarterly earnings soon.
ADMA Biologics, Inc. (ADMA - Free Report) has an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ADMA’s fourth-quarter 2023 earnings is 2 cents per share. A loss of 6 cents per share was reported in the prior-year quarter. ADMA Biologics’ earnings beat estimates in three of the trailing four quarters and matched the mark once, the average surprise being 63.57%.
Novo Nordisk A/S (NVO - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2 (Buy), at present. The Zacks Consensus Estimate for NVO’s fourth-quarter 2023 earnings is 65 cents per share, implying 54.8% growth from the year-ago quarter’s reported figure.
Novo Nordisk’s earnings beat estimates in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 0.58%.
Lantheus Holdings, Inc. (LNTH - Free Report) currently has an Earnings ESP of +6.27% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for LNTH’s fourth-quarter 2023 earnings is pegged at $1.44 per share, suggesting an 5.1% rise from the prior-year quarter’s reported number.
Lantheus’ earnings beat estimates in each of the trailing four quarters, the average surprise being 20.95%.