A Good Bet?
The core UnitedHealthcare segment and Optum – the pharmacy care services division — serve a total of 53 million and 103 million customers respectively. And, the numbers are growing every quarter, validating the relevance of the company’s diversified portfolio. Recently, UnitedHealth executives raised the full-year earnings guidance as they expect an increase in activity in the coming months – more people seek care amid pent-up demand for elective surgical procedures.
Higher Costs
Meanwhile, there is an increase in care costs even as the healthcare sector returns to the pre-pandemic levels. The higher costs would put the company’s medical insurance business under pressure due to bigger claim amounts.
From UnitedHealth’s Q2 2023 earnings call:
“Even in this challenging funding environment, we continue to prioritize the stability and affordability our members have come to rely on from UnitedHealthcare. We’re confident that next year, we will once again grow at a pace exceeding that of the broader market. While at a much lesser impact than senior outpatient care, we also are seeing increased care activity in behavioral. Over the past few years, behavioral care patterns have been accelerating as people increasingly feel comfortable seeking services.”
Earnings
Over the past several years, UnitedHealth has reported impressive quarterly earnings that either surpassed or met estimates consistently. When the company reports third-quarter results on October 13, 2023, at 5:55 a.m. ET, the outcome will likely be in line with the long-term trend. Market watchers estimate an adjusted profit of $6.32 per share, which is up 9% year-over-year. The consensus revenue forecast is $91.32 billion, which represents a 13% year-over-year increase.
The company delivered better-than-expected quarterly revenues in recent years, including in the June quarter when the top line jumped 16% annually to $92.9 billion. All business divisions – Premiums, Products, Services, and Investment & Other Income – grew in double-digits. As a result, there was a 10% increase in adjusted earnings to $6.14 per share.
Shares of UnitedHealth closed the last session at $516.23, after trading higher during the day. It has gained 9% in the past 30 days.