We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UnitedHealth (UNH) Beats on 4Q Earnings, Keeps 2019 Guidance
Read MoreHide Full Article
UnitedHealth Group Inc.’s (UNH - Free Report) fourth-quarter 2018 earnings of $3.28 per share surpassed the Zacks Consensus Estimate by 2.5%. The same was up 27% year over year.
Higher revenues, strength in both segments — UnitedHealthcare and Optum — plus membership growth led to this outperformance.
UnitedHealth has a tradition of guiding conservatively and then surpassing its own estimates to surprise investors as was seen this quarter.
Strong Operating Performance
UnitedHealth posted revenues of $58.4 billion, which beat the Zacks Consensus Estimate by 0.9%. The same was up 12.2% year over year, led by strong revenue growth rates across both UnitedHealthcare and Optum segments.
Total operating cost of $53.9 billion was up 12% year over year, led by higher medical costs, operating cost, cost of products sold and depreciation and amortization cost.
Operating margin of 7.7% in the fourth quarter improved 10 basis points year over year.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
In the reported quarter, the company’s health benefits segment, UnitedHealthcare, generated revenues of $46.2 billion, up 11% year over year. Revenue growth was driven by higher enrollment and increase in pricing. Earnings from operations remained unchanged year over year at $1.8 billion.
Revenues from Optum improved 13% year over year to $27.6 billion, reflecting strong contributions from the sub-segments — OptumHealth, OptumInsight and OptumRx. Earnings from operations jumped 23% year over year to $2.7 billion. Steady focus on accelerating growth, as well as improving margins and productivity through enhanced integration and business alignment, led to the segment’s overall improvement.
Membership Enrollment Increases
The company served 49.08 million people in the quarter, up 5.1% year over year, led by growth in members served in the Public and Senior, and International segments, partially offset by lower Commercial membership.
Capital Position Update
Cash and short-term investments at quarter-end were $14.3 billion, down 7.5% year over year.
Debt-to-total capital ratio was 40.2%, up 130 basis points sequentially. Cash flow from operations grew 16% year over year to $15.7 billion.
2019 Guidance Affirmed
UnitedHealth reaffirmed its 2019 adjusted earnings per share guidance of $14.4014.70 (or $13.7014.00 on a GAAP basis including intangible amortization), which was provided last month by the company.
The company also expects revenue of $243245 billion and cash flow from operations of $17.37.8 billion for 2019.
Our Take
UnitedHealth’s vast and diversified business operations, spanning from health benefit to health services, and a number of accretive acquisitions, that have driven its performance from the past several years, will be the growth catalysts this year too.
Moreover, a solid balance sheet will enable acquisitions that should drive inorganic growth. Good command on controlling medical cost should aid its margins.
Zacks Rank and Other Stocks That Warrant a Look
UnitedHealth, with a Zacks Rank #2 (Buy), has got this reporting cycle off to a flying start. While the other players in the health care space are lined up to report financial results, below are three stocks, poised to beat on earnings per the proven Zacks model.
HCA Healthcare, Inc. (HCA - Free Report) has an Earnings ESP of +2.09% and a Zacks Rank #1 (Strong Buy). The company is expected to report fourth-quarter earnings results on Jan 29.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #2. The company is expected to report fourth-quarter earnings results on Feb 6.
Tenet Healthcare Corporation (THC - Free Report) has an Earnings ESP of +16.7% and a Zacks Rank #2. The company is expected to report fourth-quarter earnings results on Feb 25.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
UnitedHealth (UNH) Beats on 4Q Earnings, Keeps 2019 Guidance
UnitedHealth Group Inc.’s (UNH - Free Report) fourth-quarter 2018 earnings of $3.28 per share surpassed the Zacks Consensus Estimate by 2.5%. The same was up 27% year over year.
Higher revenues, strength in both segments — UnitedHealthcare and Optum — plus membership growth led to this outperformance.
UnitedHealth has a tradition of guiding conservatively and then surpassing its own estimates to surprise investors as was seen this quarter.
Strong Operating Performance
UnitedHealth posted revenues of $58.4 billion, which beat the Zacks Consensus Estimate by 0.9%. The same was up 12.2% year over year, led by strong revenue growth rates across both UnitedHealthcare and Optum segments.
Total operating cost of $53.9 billion was up 12% year over year, led by higher medical costs, operating cost, cost of products sold and depreciation and amortization cost.
Operating margin of 7.7% in the fourth quarter improved 10 basis points year over year.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise | UnitedHealth Group Incorporated Quote
Strong Performance Across Segments
In the reported quarter, the company’s health benefits segment, UnitedHealthcare, generated revenues of $46.2 billion, up 11% year over year. Revenue growth was driven by higher enrollment and increase in pricing. Earnings from operations remained unchanged year over year at $1.8 billion.
Revenues from Optum improved 13% year over year to $27.6 billion, reflecting strong contributions from the sub-segments — OptumHealth, OptumInsight and OptumRx. Earnings from operations jumped 23% year over year to $2.7 billion. Steady focus on accelerating growth, as well as improving margins and productivity through enhanced integration and business alignment, led to the segment’s overall improvement.
Membership Enrollment Increases
The company served 49.08 million people in the quarter, up 5.1% year over year, led by growth in members served in the Public and Senior, and International segments, partially offset by lower Commercial membership.
Capital Position Update
Cash and short-term investments at quarter-end were $14.3 billion, down 7.5% year over year.
Debt-to-total capital ratio was 40.2%, up 130 basis points sequentially.
Cash flow from operations grew 16% year over year to $15.7 billion.
2019 Guidance Affirmed
UnitedHealth reaffirmed its 2019 adjusted earnings per share guidance of $14.4014.70 (or $13.7014.00 on a GAAP basis including intangible amortization), which was provided last month by the company.
The company also expects revenue of $243245 billion and cash flow from operations of $17.37.8 billion for 2019.
Our Take
UnitedHealth’s vast and diversified business operations, spanning from health benefit to health services, and a number of accretive acquisitions, that have driven its performance from the past several years, will be the growth catalysts this year too.
Moreover, a solid balance sheet will enable acquisitions that should drive inorganic growth. Good command on controlling medical cost should aid its margins.
Zacks Rank and Other Stocks That Warrant a Look
UnitedHealth, with a Zacks Rank #2 (Buy), has got this reporting cycle off to a flying start. While the other players in the health care space are lined up to report financial results, below are three stocks, poised to beat on earnings per the proven Zacks model.
You can see the complete list of today’s Zacks #1 Rank stocks here.
HCA Healthcare, Inc. (HCA - Free Report) has an Earnings ESP of +2.09% and a Zacks Rank #1 (Strong Buy). The company is expected to report fourth-quarter earnings results on Jan 29.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #2. The company is expected to report fourth-quarter earnings results on Feb 6.
Tenet Healthcare Corporation (THC - Free Report) has an Earnings ESP of +16.7% and a Zacks Rank #2. The company is expected to report fourth-quarter earnings results on Feb 25.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>