UNH Earnings Preview: What to Expect When UnitedHealth Reports Q2 Results

Health insurer UnitedHealth Group (NYSE: UNH) stands out in the healthcare sector with its unique business model that spans the full spectrum of services in the industry. While the company has dominated the health insurance market over the past few years, the stock has recently come under pressure due to uncertainty in the macroeconomic environment.

For years, investors have valued the Minnesota-based company for its successful business model and solid fundamentals. UNH has a history of consistently maintaining a slow but steady growth trend. However, the stock has seen some weakness in the recent past, resulting in a lower valuation that looks attractive from an investment perspective. The stock has traded mostly sideways over the past year and has often underperformed the S&P 500, although it did peak towards the end of the year. The company raised its dividend by 14% a year earlier and is currently offering an above-average yield of 1.6%.

Q2 report in progress

As UnitedHealth prepares to release its second-quarter results, Wall Street analysts are forecasting earnings of $6.70 per share on an adjusted basis. That estimate represents an improvement from the year-ago quarter, when the company earned $6.14 per share. The consensus revenue estimate is $98.82 billion, compared to $92.9 billion in the second quarter of 2023. The report is due out Tuesday, July 16, at 5:55 a.m. ET.

The priority for management is to develop existing businesses and enter new areas through reinvestment in operations and acquisitions. In 2023, the company acquired home care company LHC Group for $5.4 billion. Meanwhile, UnitedHealth’s Optum unit has revealed plans to buy Amedisys, another home care provider, with the deal expected to close in the second half of the year. Recent growth initiatives have positioned the company to capitalize on emerging industry opportunities.

Perspectives

In the last quarter, the financial result of the healthcare group was negatively affected Changing healthcare cyberattack that forced it to pay a ransom to protect patient data. But such temporary setbacks may have only a limited impact on the business, given the scale of the operation. The company’s long-term prospects appear intact as demand for healthcare services continues to grow, largely due to a rapidly aging population.

“Our strategy remains focused on providing the greatest stability possible in a funding-constrained environment, improving outcomes and experiences for the consumers we are honored to serve, and delivering the results you expect from us. We believe our long-term perspective and purposeful, multi-year approach, which we began last year, serve us well, positioning us as a sustainable, competitive force. Among several noteworthy business highlights to share, UnitedHealthcare was honored to secure major Medicaid wins in Virginia, Texas and Michigan.” UnitedHealth CEO Andrew Witty said in a statement a few months ago:

Solid first quarter

The company entered fiscal year 2024 on a positive note, recording revenue growth in all four operating segments, led by the core segment Bonus business. Total revenue rose 9% year over year to about $100 billion, slightly above expectations. As a result, adjusted net income per share rose 10% annually to $6.91. Net income beat estimates, a trend that has been ongoing for more than a decade.

Shares topped $490 at one point during Monday trading, after closing lower the previous session. They have lost about 8% over the past six months.