Back to top

Image: Bigstock

What's in the Store for UnitedHealth (UNH) Earnings in Q1?

Read MoreHide Full Article

We expect consolidated revenues to grow at UnitedHealth Group Inc. (UNH - Free Report) , aiding its first-quarter 2019 earnings, slated for release on Apr 16, 2019, before the opening bell.

Revenue growth at both UnitedHealthcare and Optum segments along with membership strength is expected to boost the company’s first-quarter results.

Factors to Influence Q1 Results

For the company’s UnitedHealthcare segment, we expect revenue rise from an increasing number of people served, membership growth in higher acuity programs coupled with higher pricing to cover expected medical cost trends. The Zacks Consensus Estimate for the segment’s premium is pegged at $47.8 billion, translating into year-over-year growth of 8.4%.

We expect Optum, the company’s health service business, to be a significant catalyst for its earnings. Earnings of Optum Health, a sub-segment of Omtum, are anticipated to be driven by growth in care delivery, and behavioral, digital consumer engagement and health financial services. The revenues of another sub-segment,OptumInsight, are expected to be bumped up by an expansion in payer technology and services plus care provider advisory services. The Zacks Consensus Estimate for this segment’s revenues stands at $26.5 billion, up 12.2% year over year.

The company’s solid membership can be attributed to rise in Medicare Advantage enrollments. Medicare Advantage should see more people being served through individual and employer-sponsored group Medicare Advantage plans. Medicare Supplement membership should gain from sturdy customer retention and new sales.

Medicaid growth, which suffered in the second half of 2018, should be bolstered by actions taken on both structural costs and rate recovery.
Also, membership in the company’s international markets should grow from business expansion, owing to acquisition of Empresas Banmédica, a leading health care provider and insurer serving Chile, Colombia and Peru, in the first quarter of 2018.

UnitedHealth is expected to incur additional investment and operating costs for accelerating existing initiatives along with artificial intelligence, data analytics, individual health record custodianship, digital health, better net promoter scores and health-related initiatives in local communities.
The company’s profitable results should lead to an enhanced return on equity.

The bottom line is expected to be aided by shares repurchased in the fourth quarter.

Earnings Surprise History

The company boasts an attractive earnings surprise history, having surpassed estimates in the trailing four reported quarters, the average being 3.39%. This is depicted in the chart below:

UnitedHealth Group Incorporated Price and EPS Surprise

Here is What Our Quantitative Model Predicts:

Our proven model does not conclusively show that UnitedHealth is likely to beat earnings this season because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to do so. But that is not the case here.

Earnings ESP: UnitedHealth has an Earning ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: UnitedHealth carries a Zacks Rank #3, which increases the predictive power of ESP. However, its 0.00% ESP makes surprise prediction difficult.

Stocks That Warrant a Look

Here are some companies worth considering in the healthcare sector as our model shows that these have the right combination of elements to beat estimates this to-be-reported quarter:

Centene Corp. (CNC - Free Report) has an Earnings ESP of +2.09% and is a #1 Ranked player. The company is expected to report first-quarter 2019 earnings figures on Apr 23.

WellCare Health Plans, Inc. (WCG - Free Report) has an Earnings ESP of +0.63 and is a #2 Ranked player.

Cardinal Health, Inc. (CAH - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Radical New Technology Creates $12.3 Trillion Opportunity

Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.

Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.

See the 7 breakthrough stocks now>>