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How Will Membership Affect UnitedHealth's (UNH) Q2 Earnings?

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UnitedHealth Group Inc.’s (UNH - Free Report) second-quarter earnings should be partially offset by a decline in enrollment or the number of customers served in the second quarter. Going by the Zacks Consensus Estimate, total medical membership should be 48.89 billion members, down 1.2% year over year.

In the last reported quarter, the company’s total enrollment grew 5.2% year over year to 48.85 million members. We expect membership growth/declines from the following businesses:

UnitedHealthcare Commercial: In commercial group plans, the second quarter should reflect employers shifting their retirees from self-funded offerings to group Medicare Advantage plans and lower retention due to pricing actions to cover the full cost of the health insurance tax. This should result in  a decline in membership from this business. The Zacks Consensus Estimate for membership from this business is 26.8 billion, down 11.4% year over year.  

UnitedHealthcare Medicare & Retirement: We expect an increase in Medicare Advantage through higher sales of individual products and employer-sponsored group retiree plans. The company is a leader in Medicare business, and other companies following it are Humana Inc. (HUM - Free Report) , Anthem Inc. and Aetna Inc. .  

The company’s Medicaid business should continue to be strong led by the ongoing national growth, serving dual special needs’ members. The Zacks Consensus Estimate for the number of people served in Public and Senior business is 16.08 million, up 6.6% year over year.

Healthcare Services International: Having broadened its platform to serve people in Chile, Colombia and Peru through a recent merger with Empresas Banmédica, the Zacks Consensus Estimate for membership in this sub-segment is 5.97 billion, up 45.3% year over year.

Despite the likely slight decline in membership, we expect overall results to gain from an increase in revenues from both its segments, UnitedHealthcare and Optum.

UnitedHealth carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Click here to know how the company’s overall Q2 performance is expected to be.

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