UnitedHealth Group (NYSE:UNH) recently released its third-quarter 2024 earnings report, showcasing stronger than expected results but a decrease in its annual EPS outlook. This news comes after the company reported adjusted EPS of $7.15, surpassing the consensus of $7.00 and showing improvement from the previous year’s $6.56. Additionally, UnitedHealth’s revenues saw a significant increase of nearly $8.5 billion (+9.1% Y/Y) to $100.8 billion, beating the estimated $99.28 billion, driven by growth in both Optum and UnitedHealthcare domestically.
The company cited earnings from operations at $8.7 billion, revealing $0.3 billion in unfavorable cyberattack effects. Adjusted earnings from operations stood at $9.0 billion, taking into account the impacts of the Change Healthcare business disruption while excluding the direct response costs from the cyberattack. This information demonstrates the resilience of UnitedHealth amid challenges in the current economic landscape.
When examining the medical cost ratio (MCR) for the third quarter, UnitedHealth reported a ratio of 85.2%, compared to 82.3% the previous year. Generally, a lower ratio indicates higher profitability, and UnitedHealth attributed this increase to factors such as CMS Medicare funding reductions, medical reserve development effects, and business and member mix.
Looking at the individual segments of UnitedHealth, UnitedHealthcare reported revenue of $74.9 billion, a growth from the previous year’s $69.9 billion, while Optum saw an increase to $63.9 billion in revenue from $56.7 billion. These segments’ performances align with the overall positive trajectory of UnitedHealth despite challenges faced throughout 2024.
In terms of guidance, UnitedHealth revised its net profit expectation to $15.50-$15.75 per share, down from the previous range of $15.95-$16.40, reflecting activities related to the disposition of South America operations and the impacts of the Change Healthcare cyberattack. The adjusted EPS outlook remains within the $27.50 to $28.00 range established nearly a year ago, even with estimated business disruption impacts for Change Healthcare services, which have slightly increased from the previous quarter.
While UNH stock saw a 3.70% decline to $583.00 during premarket trading, these numbers provide a nuanced look at UnitedHealth’s performance and outlook for the remainder of 2024. Overall, UnitedHealth’s ability to navigate challenges and deliver strong results highlights its position as a key player in the finance sector.
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