UnitedHealth Group Incorporated
UNH
is set to report second-quarter 2022 results on Jul 15, before the opening bell.
The healthcare plan provider reported adjusted earnings of $5.49 per share for the first quarter, beating the Zacks Consensus Estimate of $5.40 on the back of strong performances in UnitedHealthcare and Optum businesses. An increased number of people served by UnitedHealthcare and solid growth in comprehensive managed services in Optum sub-segments aided the results.
Let’s see how things have shaped up before the
second-quarter earnings
announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share of $5.24 suggests an 11.5% increase from the prior-year figure of $4.70. The earnings estimate remained stable over the past week. The consensus estimate for second-quarter revenues of $79.6 billion indicates an 11.6% increase from the year-ago reported figure.
UnitedHealth beat the consensus estimate for earnings in each of the prior four quarters, with the average being 3.7%. This is depicted in the graph below:
UnitedHealth Group Incorporated Price and EPS Surprise
UnitedHealth Group Incorporated price-eps-surprise
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UnitedHealth Group Incorporated Quote
Factors to Note
UnitedHealth’s second-quarter results are expected to be boosted by higher premiums. The Zacks Consensus Estimate for revenues from premiums is pegged at $63,110 million, indicating an increase from $56,233 million a year ago. Solid insurance sales of dental and vision plans might have aided premium growth. Also, the consensus mark for products is pegged at $9,381 million, signaling a jump from $8,433 million a year ago.
Revenues from UnitedHealthcare, UNH’s largest segment that sells insurance, are likely to have risen on higher membership in the community and senior programs. The Zacks Consensus Estimate for services is pegged at $6,717 million, indicating an increase from the year-ago figure of $6,099 million. As such, the consensus mark for revenues in UnitedHealthcare indicates 9.4% growth from the year-ago period.
The Optum business segment is expected to have witnessed a higher contribution from sub-segments, OptumHealth and Optum Insight, in the second quarter. A rise in the number of people being catered to in value-based care arrangements and the growing strength of affiliated physicians might aid the results. Optum Insight is likely to have witnessed higher profits owing to growth in services and technology offerings and improved productivity.
The Zacks Consensus Estimate for operating income from the Optum business is pegged at $3,339 million, signaling a jump from $2,883 million in the prior-year quarter. This might have led to a year-over-year rise in the bottom line.
However, UnitedHealth is likely to have faced an elevated expense level due to a rise in medical and operating costs. Higher costs of products sold are likely to have reduced its margins. This might have affected its profit levels in the second quarter, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for UnitedHealth this time around. The combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP
: The company’s Earnings ESP is 0.00%. This is because the Most Accurate Estimate currently stands at $5.24 per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Zacks Rank
: UnitedHealth currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for UnitedHealth, here are some companies from the
Medical
space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Affimed N.V.
AFMD
has an Earnings ESP of +16.67% and a Zacks Rank #2.
You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The Zacks Consensus Estimate for Affimed’s bottom line for the to-be-reported quarter indicates a 5.3% improvement from the year-ago period. AFMD witnessed four upward estimate revisions in the past 60 days compared with one in the opposite direction.
Centene Corporation
CNC
has an Earnings ESP of +1.42% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Centene’s earnings per share for the to-be-reported quarter is pegged at $1.69, implying a 35.2% improvement from the year-ago figure. CNC witnessed five upward estimate revisions in the past 30 days compared with none in the opposite direction.
Elevance Health Inc.
ELV
has an Earnings ESP of +0.43% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Elevance Health’s bottom line for the to-be-reported quarter indicates a 10% jump from a year ago. The consensus mark for ELV’s top line indicates a 14.6% year-over-year increase.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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