UnitedHealth surpassed Q2 forecasts, with $98.9B revenue and $6.80 per share, despite a costly cybersecurity attack, rising medical costs and strategic shifts that impact its 2024 outlook.
UnitedHealth, the US insurance giant, posted better-than expected Q2 earnings on Tuesday. Revenue was up more than 6 percent year-on-year.
The S&P 500 company reported earnings per share of $6.80. This was above analyst expectations of $5.67. Revenues came in at $98,9 billion, an increase from $92,90 billion last year, and surpassed the consensus estimate of $98.72.
UnitedHealth’s medical-care ratio, which is a percentage of the money spent on services, has increased from 83.2% to 85.1%, exceeding the consensus of 84.5 percent.
Medical costs increased by 8.6% to $65.46 Billion, which is 7.2% of the total operating costs. As of June 30th, the company had served 29.57 millions people in the United States, compared with 27.18 million one year earlier.
Cyberattacks are still a major problem
Cyberattacks are still a major problem
The stock of UnitedHealth was slightly down in the early morning trading despite a strong second-quarter. Investors are still concerned about the cyberattack that occurred in February.
The firm is expected to lose more than $2.3 Billion in the attack, which is considered one of the worst attacks ever to hit American healthcare.
The company has updated its outlook for 2024 to $15.95 to 16.00 per share. This reflects the estimated impact of its Change Healthcare unit and the classification as held for sale of its remaining South America operations. UnitedHealth has recently completed the sale of its Brazilian operations.
The company projected its net earnings outlook for 2024 in the range of $17.60 – $18.20 a share at the end of the 1st quarter. The company has confirmed its adjusted net profit outlook of $27.50 – $28.00 per share.
UnitedHealth stock is up nearly 4% as of the time this article was written, despite the morning blip. The stock is on course for a six session winning streak.
The stock is still down about 1% YTD compared to the Health Care Select Sector ETF (XLV), which has gained almost 10%, and the S&P 500, which has gained almost 20%.
What is the future of UnitedHealth stock?
What is the future of UnitedHealth stock?
We believe that the stock is still well-positioned to generate returns for its investors. This is due to a number of factors, including a solid market position, an expansion of service offerings and new agreements. Not to mention that the company has now beaten EPS estimates for at least 21 consecutive quarters.
The company also has a solid balance sheet, and uses its cash wisely to buy back stock and distribute dividends. The company increased its annual dividend by 12 percent last month, marking the 15th consecutive year with double-digit increases.
UnitedHealth’s government division is also impressive, especially now that Trump looks more likely to be the next president. The positive outlook for the global health insurance market, which is expected to grow at a 6.2% CAGR from 2024-2032, bodes well for UnitedHealth, a leader in this sector.
The company appears to be on a good path, despite its global business, regulatory inquiries, and high operating expenses due to rising medical costs. UnitedHealth’s diversified business portfolio, AI-driven analysis, strategic growth initiatives for home healthcare, and favorable macroeconomic environment should continue to drive its growth.
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