UnitedHealth Group Incorporated
UNH
reported second-quarter 2022 adjusted earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 6.3%. The bottom line improved 19% year over year.
UNH’s quarterly performance was driven by sustained membership growth in its UnitedHealthcare business. Strong expansion in value-based arrangements at the Optum Health segment contributed to the upside. However, the upside was partly offset by elevated operating costs.
Revenues of UNH were $80.3 billion, which climbed 13% year over year in the second quarter on the back of sound contributions made by UnitedHealthcare and Optum segments. The top line outpaced the consensus mark by 0.9%.
Shares of UnitedHealth Group gained 1.7% in the pre-market trading session, courtesy of its better-than-expected second-quarter results.
Q2 Business Performance
The medical care ratio of UnitedHealth Group improved 130 basis points (bps) year over year to 81.5% during the quarter under review.
Operating cost ratio of 14.6% deteriorated 10 bps year over year due to the business mix and continued investments undertaken by UNH to pursue future growth opportunities. Nevertheless, the metric partly benefited from consistent productivity gains.
Total operating costs amounted to $73.2 billion in the second quarter, which increased 12% year over year due to higher medical costs, operating expenses, cost of products sold, and depreciation and amortization.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart
|
UnitedHealth Group Incorporated Quote
Segmental Performances
The health benefits segment of UnitedHealth Group —
UnitedHealthcare
reported revenues of $62.1 billion, which improved 12% year over year.
Earnings from operations climbed 25.8% year over year to $3.9 billion in the second quarter. The improvement can be attributed to strong membership growth and consistent management of medical and operating costs.
Revenues from another segment,
Optum
, totaled $45.1 billion, up 18% year over year on the back of double-digit growth across each of the segment’s businesses. Optum Health, which has been gaining from a greater number of people served under value-based care arrangements and consistent strengthening of care services, contributed the most to Optum’s top-line growth.
Earnings from operations grew 13.8% year over year to $3.3 billion in the quarter under review.
Apart from OptumHealth, the other sub-segments of Optum also exhibited impressive performances in the second quarter. While Optum Insight revenues gained from better comprehensive managed services and enhanced information technology and data analytics offerings suite, the performance of Optum Rx sub-segment benefited from broadening of pharmacy care services offerings and the effective catering of new clients.
Uptick in Membership Enrollment
The UnitedHealthcare segment catered to 51.25 million people as of Jun 30, 2022, up 162 million lives year over year, thanks to the community-based and senior offerings of the unit.
Financial Position (as of Jun 30, 2022)
UnitedHealth Group exited the second quarter with cash and short-term investments of around $28 billion, which increased 17% from the 2021-end level. Total assets of $230.2 billion climbed 8.5% from the figure at the 2021-end.
Long-term debt, less current maturities of $45.8 billion, escalated 8.1% from the 2021-end figure.
Return on equity came in at 27.9%, which improved 270 bps year over year in the second quarter.
Increase in Cash Flows
During the six months ended Jun 30, 2022, UnitedHealth Group generated cash flows from operations of $12.2 billion, which increased 5.6% from the prior-year comparable period.
Share Repurchase and Dividend Update
In the reported quarter, UnitedHealth Group rewarded its shareholders with share repurchases and dividends to the tune of $4 billion.
2022 Guidance Upped
Backed by the performance exhibited by UNH in the first half of 2022 and growth projections, UnitedHealth Group raised its earnings outlook for the year.
Net earnings is now predicted within $20.45 to $20.95 per share, higher than the prior guidance of $20.30-$20.80. The mid-point of the revised outlook indicates 14.5% growth from the 2021 figure.
Meanwhile, adjusted net earnings per share is anticipated to be $21.40-$21.90 band, up from the previous projection of $21.20-$21.70. The mid-point of the updated outlook suggests a 13.8% improvement from the 2021 figure.
Zacks Rank
UnitedHealth Group carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Upcoming Releases
Here are companies worth considering from the
Medical
space as our model shows that this has the right combination of elements to beat on earnings this reporting cycle:
Merck & Co., Inc.
MRK
has an Earnings ESP of +7.18% and a Zacks Rank #1 (Strong Buy), currently. The Zacks Consensus Estimate for Merck’s
second-quarter 2022 earnings
is pegged at $7.31, which indicates a 21.4% increase from the prior-year quarter’s reported figure.
MRK beat earnings estimates in three of the trailing four quarters and missed once.
AstraZeneca
AZN
has an Earnings ESP of +1.30% and a Zacks Rank #1, currently. The Zacks Consensus Estimate for AstraZeneca’s
second-quarter 2022 earnings
is pegged at $3.29, which indicates a 24.2% increase from the prior-year quarter’s reported figure.
AZN beat earnings estimates in two of the trailing four quarters, matched once and missed the remaining one.
Repligen Corporation
RGEN
has an Earnings ESP of +0.40% and a Zacks Rank #3, currently. The Zacks Consensus Estimate for Repligen’s
second-quarter 2022 earnings
is pegged at $3.10, which indicates a 1.3% increase from the prior-year quarter’s reported figure.
RGEN beat earnings estimates in each of the trailing four quarters.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
