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UnitedHealth (UNH) Beats on Q1 Earnings, Revises '21 Guidance

·4 min read

UnitedHealth Group Incorporated’s UNH first-quarter 2021 earnings of $5.31 per share outpaced the Zacks Consensus Estimate by 20%. Also, the bottom line was up 42.7% year over year owing to higher revenues.

UnitedHealth’s revenues of $70.2 billion beat the Zacks Consensus Estimate by 1.9% and also improved 9% year over year. This uptick can be attributed to revenue growth at both Optum and, the community and senior benefit businesses of UnitedHealthcare.

The company’s medical care ratio of 80.9% improved 10 basis points year over year.

Operating cost ratio of 14.6% improved 90 basis points year over year owing to the repealment of the health insurance tax and continued operating efficiency gains, partially offset by business mix, and increased service, growth and innovation investments.

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote

Strong Segmental Performances

The company’s health benefits segment UnitedHealthcare generated revenues worth $55.1 billion, up 7.8% year over year. The rise in revenues was attributable to solid growth witnessed in serving community and senior programs, partly offset by a decline in commercial enrollment.

Earnings from operations worth $4.1 billion were up 41.4% year over year, reflecting growth in people served and one less calendar day in the prior-year quarter.

Revenues from another segment, Optum, rose 10.8% year over year to $36.4 billion, reflecting robust contributions from the sub-segments of OptumHealth (up 31%) and OptumInsight (up 14.4%). Earnings from operations rose 23.8% year over year to $2.6 billion.

Decline in Membership

The company served 49.475 million people in the reported quarter, up 935,000 lives year over year owing to higher member enrollment in the Community and Senior business, partly offset by lower membership in Commercial business.

Capital Position (as of Mar 31, 2021)

Cash and short-term investments were $22.9 billion, up 15.9% from the level as of 2020 end.

Long-term debt of $37.4 billion slipped 3.2% from the level at 2020 end.

Impressive Cash Flow

During the quarter, cash flow from operations of $6 billion improved 104% year over year on the back of higher net earnings.

2021 Guidance Updated

The company revised its full-year earnings per share outlook for 2021. Net earnings per share are expected between $17.15 and $17.65, up from the prior estimate of $16.90-$17.40. Adjusted net earnings are forecast in the range of $18.1-$18.6 per share compared with the previous estimate of $17.75-$18.25.

Zacks Rank

UnitedHealth currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Here are some companies worth considering from the healthcare sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Cigna Corp. CI has an Earnings ESP of +1.06% and a Zacks Rank #3, currently.

Anthem Inc. ANTM has an Earnings ESP of +5.14% and a Zacks Rank of 3, presently.

Centene Corp. CNC has an Earnings ESP of +18.89% and a Zacks #3 Ranked player at present.

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