UnitedHealth Group kicked off the Q4 earnings season for managed-care insurers before Friday's open. UnitedHealth's earnings topped estimates while the company stuck by 2023 earnings guidance offered in late November. UNH stock, a Dow Jones component, rose in Friday morning stock market action.
CEO Andrew Witty said in a statement that UnitedHealth in 2023 intends on "delivering balanced growth enterprisewide, improving support for consumers and care providers, and investing to make high-quality care simpler, more accessible and affordable for everyone."
UnitedHealth Earnings
Results: UnitedHealth's adjusted earnings rose 25.4% vs. a year earlier to $5.34 per share, 17 cents ahead of estimates. Revenue grew 12.3% to $82.79 billion, edging past estimates of $82.59 billion.
The medical cost ratio, paid benefits as a share of premiums, fell to 82.8% vs. 83.7% in the year-ago quarter.
Medical membership grew by 375,000 from the prior quarter. UNH added 130,000 commercial members, 70,000 Medicare Advantage members and 165,000 Medicaid members.
The Optum Health services unit continued to help drive earnings growth amid the expansion of its value-based care delivery initiatives, in which pay relates to performance, rather than being paid for each service. Optum Health revenue per consumer served increased 29% in 2022.
Outlook: UNH reiterated full-year 2023 earnings guidance of $24.40 to $24.90 per share, and cash flow from operations of $27 billion to $28 billion. The analyst EPS consensus is $24.94, according to FactSet.
Commenting on the 2023 guidance from UNH in a Nov. 28 note, Jefferies analyst David Windley said that medical cost guidance of 82.6% of premiums "seems conservative." It reflects potential rising acuity, or intensity of care and services required, due to deferred care during the pandemic as well as a more severe flu season.
UNH Stock
In early Friday trading, UnitedHealth stock rose 2.3% to 506.89, turning higher as the broad market recovered from weakness following bank earnings.
UNH stock fell through its 200-day line on Jan. 4 and remains below the key technical level. The stock is 9% off its 52-week high.
UnitedHealth and other managed care stocks had been in the market's top tier among industry groups through October, as investors looked for defensive plays that could not only weather a recession but also offer growth. But the group sat out the rally off the bear-market bottom, and has gone the wrong way as stocks rallied over the past two weeks.
Among other big managed-care plays, only Humana and Cigna remain above their 200-day moving averages.
