Healthcare ETFs’ Quarterly Checkup Looks Healthy
This article was originally published on ETFTrends.com.
Strong earnings results from healthcare giants are supporting a rally in the defensive sector-related exchange traded funds.
On Tuesday, the Health Care Select Sector SPDR (XLV) gained 2.5%.
Industry heavyweights UnitedHealth Group (etftrends.com/quote/UNH) and Johnson & Johnson (etftrends.com/quote/JNJ) revealed third-quarter results that topped analyst expectations on both the top and bottom line, and the companies raised their full-year profit guidance, the Wall Street Journal reports.
UNH jumped 4.1% and JNJ rose 1.4% on Tuesday. UNH makes up 7.1% of XLV's underlying portfolio and JNJ makes up 10.2% of the healthcare ETF.
Other ETFs with large exposures to UnitedHealth and Johnson & Johnson also strengthened on the quarterly results. On Tuesday, the iShares U.S. Healthcare Providers ETF (IHF) advanced 2.9%, iShares Evolved U.S. Healthcare Staples ETF (Cboe:IEHS) gained 1.4% and iShares Evolved U.S. Innovative Healthcare (Cboe:IEIH) rose 1.0%.
UnitedHealth, the country's largest publicly traded health insurer, reported revenue grew 12% and adjusted earnings expanded 28% year-over-year. Looking ahead, the company expects continued growth in key markets like Medicare Advantage health plans and OptumRx pharmacy benefit management business.
"These results reflect our businesses delivering increased value at an accelerating pace to society and the millions of people we serve," UnitedHealth Group CEO David S. Wichmann said in a press release.
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Meanwhile, Johnson & Johnson said revenue in all three of its major businesses, including pharmaceuticals, consumer health and medical devices, were flat or positive, and its consumer business improved revenue by 6% year-over-year, its best result in two years.
"It was a strong quarter across all three of our segments of the business," J&J's chief financial officer Joe Wolk told CNBC.
"Pharmaceuticals, I just can't say enough about that division for us," Wolk added. "It continues to just generate new products in a profound way that's transformational to the current state of care, and that's led the growth of our company for many quarters now."
For more information on the healthcare segment, visit our healthcare category.
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