UnitedHealthcare’s results for the fourth quarter of 2020 also were better than expected.
Andrew Harrer/Bloomberg
Shares of the insurance giant UnitedHealth Group were up 2.5% early Thursday after the company reported earnings that significantly beat Wall Street expectations, and raised its guidance for the full year.
UnitedHealth (ticker: UNH) reported adjusted earnings of $5.31 per share for the first quarter of 2021, 20.9% higher than the FactSet consensus estimate of $4.39 per share. The company reported revenues of $70.2 billion for the quarter, 9% higher than the same quarter last year, and slightly better than the FactSet consensus estimate of $69 million.
What’s more, UnitedHealth increased its earnings forecast for the full 2021 fiscal year, saying it now expects adjusted profits of between $18.10 and $18.60 per share, up from between $17.75 and $18.25. Analysts expect earnings of $18.19, according to FactSet.
“The unique combined capabilities of Optum and UnitedHealthcare and the unwavering commitment of our people continue to help advance the way care is delivered, improving results for those we serve and shareholders,” the company’s CEO, Andrew Witty, said in a statement.
UnitedHealth shares are up 7.1% so far this year, and 25.9% over the past 12 months. The stock trades at 19.8 times the per-share earnings expected over the next 12 months, above its 5-year average of 17.3 times.
The quarter is the first under Witty, who succeeded David Wichmann as CEO in February. The stock traded down on the news of Wichmann’s departure, which wasn’t expected.
Back in January, UnitedHealth slightly beat earnings expectations for the fourth quarter of 2020, shortly after announcing it would acquire the healthcare technology firm Change Healthcare (CHNG) for $13 billion.
In its earnings release early Thursday, the company said that its new 2021 guidance includes $1.80 per share in “potential net unfavorable impact” due to Covid-19. The company said that costs related to Covid-19 treatments and tests were higher than expected.
Revenues for the company’s health insurance arm, UnitedHealthcare, were $55.1 billion for the quarter, up from $51.1 billion for the same quarter last year. The company said that the number of people served by UnitedHealthcare grew by 1 million in the first quarter of the year.
Revenues from its health services unit Optum were $36.4 billion for the quarter, up from $32.8 billion for the same quarter last year.
In a note early Thursday, BMO Capital Markets analyst Matt Borsch wrote that the stock, and the managed care sector overall, should gain today in response to the earnings results and the increased forecast.
Cantor Fitzgerald analyst Steven Halper, in a separate note, wrote: “The results reinforce our view that despite some near-term uncertainty, we believe UNH is poised for another solid year in 2021.”
Write to Josh Nathan-Kazis at [email protected]
