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UnitedHealth (UNH) Up 1.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for UnitedHealth Group (UNH - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UnitedHealth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UnitedHealth reported fourth-quarter 2021 earnings of $4.48 per share, which outpaced the Zacks Consensus Estimate by 4.2%. The bottom line increased 77.8% year over year on revenue growth.
Revenues of $73.7 billion climbed 12.6% year over year, driven by revenue growth at both business units of UnitedHealthcare and Optum. The top line beat the Zacks Consensus Estimate by 1%.
Medical care ratio for the fourth quarter was 83.7%.
Operating margin for the quarter stood at 7.5% compared with the year-ago quarter's metric of 5.4%.
Total operating costs for the fourth quarter escalated 10.1% year over year to $68.2 billion due to increased medical costs, and a rise in depreciation and amortization along with higher cost of products sold.
Segmental Performances
UnitedHealthcare generated revenues of $56.4 billion in the quarter. Year-over-year revenue growth of 12.1% was driven by an increase in the number of people served.
Earnings from operations improved to $2.1 billion from the year-ago quarter’s figure of $396 million.
Revenues at Optum improved 14.5% year over year to $41.1 billion on the back of solid contributions from the sub-segments. Earnings from operations of $3.4 billion rose 9.7% year over year in the fourth quarter.
OptumHealth continued to perform well, courtesy of a higher number of people being catered to in value-based care arrangements and the growing strength of affiliated physicians. While OptumInsight revenues improved on growth in comprehensive managed services, OptumRx gained from higher script volumes.
Increase in Membership
UnitedHealth served 50.6 million people at the end of the quarter, up 4.5% year over year owing to increased member enrollment in Medicare Advantage and Dual Special Needs Plans and an expansion in the broader Medicaid market.
Financial Position
UNH exited the fourth quarter with cash and short-term investments of $23.9 billion, up from $19.8 million at the 2020-end level.
As of Dec 31, 2021, long-term debt less current maturities of $42.3 billion increased from $38.6 million at 2020 end.
Decline in Cash Flows
Cash flow from operations in 2021 totaled $22.3 billion, up nearly 0.8% year over year.
Full-Year Share Repurchase and Dividend Update
UnitedHealth returned $5.3 billion to its shareholders in the year via dividends, up 15% year over year, and $5 billion worth of share buyback.
2022 Guidance
UNH issued guidance for 2022 in November 2021. It affirmed its earlier projection of revenues for 2022 in the range of $317-$320 billion. Adjusted net earnings are estimated in the range of $21.10-$21.60 per share. Cash flow from operations is expected in the band of $23-$24 billion.
Full-Year Results
For 2021, UnitedHealth’s operating earnings came in at $12 billion. Its full-year revenues grew 11.8% year over year to $287.6 billion on the back of solid segmental contributions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, UnitedHealth has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UnitedHealth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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UnitedHealth (UNH) Up 1.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for UnitedHealth Group (UNH - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UnitedHealth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UnitedHealth Q4 Earnings Beat Estimates, Improve Y/Y
UnitedHealth reported fourth-quarter 2021 earnings of $4.48 per share, which outpaced the Zacks Consensus Estimate by 4.2%. The bottom line increased 77.8% year over year on revenue growth.
Revenues of $73.7 billion climbed 12.6% year over year, driven by revenue growth at both business units of UnitedHealthcare and Optum. The top line beat the Zacks Consensus Estimate by 1%.
Medical care ratio for the fourth quarter was 83.7%.
Operating margin for the quarter stood at 7.5% compared with the year-ago quarter's metric of 5.4%.
Total operating costs for the fourth quarter escalated 10.1% year over year to $68.2 billion due to increased medical costs, and a rise in depreciation and amortization along with higher cost of products sold.
Segmental Performances
UnitedHealthcare generated revenues of $56.4 billion in the quarter. Year-over-year revenue growth of 12.1% was driven by an increase in the number of people served.
Earnings from operations improved to $2.1 billion from the year-ago quarter’s figure of $396 million.
Revenues at Optum improved 14.5% year over year to $41.1 billion on the back of solid contributions from the sub-segments. Earnings from operations of $3.4 billion rose 9.7% year over year in the fourth quarter.
OptumHealth continued to perform well, courtesy of a higher number of people being catered to in value-based care arrangements and the growing strength of affiliated physicians. While OptumInsight revenues improved on growth in comprehensive managed services, OptumRx gained from higher script volumes.
Increase in Membership
UnitedHealth served 50.6 million people at the end of the quarter, up 4.5% year over year owing to increased member enrollment in Medicare Advantage and Dual Special Needs Plans and an expansion in the broader Medicaid market.
Financial Position
UNH exited the fourth quarter with cash and short-term investments of $23.9 billion, up from $19.8 million at the 2020-end level.
As of Dec 31, 2021, long-term debt less current maturities of $42.3 billion increased from $38.6 million at 2020 end.
Decline in Cash Flows
Cash flow from operations in 2021 totaled $22.3 billion, up nearly 0.8% year over year.
Full-Year Share Repurchase and Dividend Update
UnitedHealth returned $5.3 billion to its shareholders in the year via dividends, up 15% year over year, and $5 billion worth of share buyback.
2022 Guidance
UNH issued guidance for 2022 in November 2021. It affirmed its earlier projection of revenues for 2022 in the range of $317-$320 billion. Adjusted net earnings are estimated in the range of $21.10-$21.60 per share.
Cash flow from operations is expected in the band of $23-$24 billion.
Full-Year Results
For 2021, UnitedHealth’s operating earnings came in at $12 billion. Its full-year revenues grew 11.8% year over year to $287.6 billion on the back of solid segmental contributions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, UnitedHealth has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UnitedHealth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.