UnitedHealth Beats Q2 Earnings Forecast, Lifts 2023 Profit Outlook

UnitedHealth Group  (UNH) – Get Free Report posted better-than-expected second quarter earnings Friday, while lifting its full-year profit forecast, as higher revenues from its Optum division offset an expected jump in medical costs.

UnitedHealth said adjusted profits for the three months ended in June came in at $6.14 a share, up 10.2% from the same period last year and 13 cents ahead of the Wall Street consensus forecast of $6.01 per share.

Group revenues, UnitedHealth said, rose 15.6% to $92.9 billion, again topping analysts’ estimates of an $91 billion tally, while Optum revenues rose 24.8% to $56.3 billion. 

Looking into the second half of the year, UnitedHealth said it sees earnings in the region of $24.70 to $25.00 per share.

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“Our diverse health care capabilities and dedicated colleagues are enabling us to meet the needs of more people in more ways, driving substantial growth and expanding our opportunities to serve well into the future,” said CEO Andrew Witty.

UnitedHealth shares, a Dow component, were marked 2.75% higher in pre-market trading following the earnings release to indicate a Friday opening bell price of $460.00 each.

UnitedHealth’s medical cost ratio, meanwhile, was pegged 170 basis points higher at 83.2%, suggesting a larger portion of its collected premiums were paid out on insurance claims. Overall premiums were up 13.3% to $72.474 billion while operating costs rose 15.7% to $60.27 billion.

Last month, UnitedHealth’s Tim Noel, who runs UnitedHealth’s Medicare and retirement business, said the company was seeing a notable increase in older Americans opting to undergo elective procedures they had delayed during the covid pandemic.

“We’re seeing that more seniors are just more comfortable accessing services for things that they might have pushed off a bit, like knees and hips,” Noel said in remarks reported by Reuters. 

The uptick could pressure the medical-cost ratios — a key metric of profitability — for not only UnitedHealth, but rivals such as Humana  (HUM) – Get Free Report and CVS Health  (CVS) – Get Free Report, which owns Aetna, as larger portions of collected premiums are paid out on insurance claims.

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