UnitedHealth kicked off the earnings season for the managed-care group before Thursday's open, comfortably topping estimates and bumping up full-year earnings guidance. UNH stock, a Dow Jones component, rose slightly after the report.
"Disciplined execution of our long-term strategy, with a sharp focus on ensuring access to care for the people we serve, enabled us to deliver high-quality, diversified growth across Optum and UnitedHealthcare during this first quarter of 2022," CEO Andrew Witty said in a statement.
UnitedHealth Earnings
Results: UnitedHealth posted a Q1 adjusted profit of $5.49, up 3.4% from a strong year-ago quarter and 11 cents ahead of estimates. Revenue grew 14.2% to $80.149 billion, clearing estimates of just under $79 billion.
The medical cost ratio, paid benefits as a share of premiums, rose to 82% vs. 80.9% in the year-ago quarter, partly related to Covid impacts.
Medical membership rose 335,000 from Q4, as UNH added 400,000 Medicare Advantage members and 155,000 Medicaid members, more than offsetting lower commercial membership.
The Optum Health services unit helped drive earnings growth due to the "accelerating expansion of its value-based care delivery initiatives," in which pay relates to performance, rather than being paid for each service.
Optum Health now expects to serve 600,000 new patients under such arrangements in 2022 compared to its initial outlook of 500,000.
Outlook: UNH raised full-year earnings guidance to a range of $21.20 to $21.70, up from $21.10-$21.60. Analysts were expected $21.60, which represents 13.6% growth from a year ago.
UNH Stock
UNH stock rose 0.6% to 540 in early Thursday stock market action. On Wednesday, UNH stock rose 0.6% to 537.00. That put UNH stock about 7% above its recent 501.03 buy point from a double-bottom base.
Managed care stocks have been relatively strong performers this year, as investors look for defensive plays that can weather inflation, higher interest rates and rising recession risk. The policy backdrop also has been favorable, with an 8.5% boost to Medicare Advantage payments set for 2023 and the apparent fizzling of President Biden's proposal for a public option to compete against commercial insurance, among other reforms.
