UnitedHealth Group Inc. Reports Strong Q4 Earnings Despite Higher Medical Costs

Shares of UnitedHealth Group Inc. (UNH) showed a slight dip in premarket trading on Friday, following the release of their fourth-quarter financial results. The health insurer reported higher-than-expected medical costs for the quarter but still managed to exceed earnings forecasts.

Impressive Financial Performance

Net income for UnitedHealth Group rose to $5.46 billion, or $5.83 per share, compared to $4.76 billion, or $5.03 per share, in the same period last year. Excluding nonrecurring items, adjusted earnings per share came in at $6.16, surpassing the FactSet consensus estimate of $5.98.

The company's Q4 revenue saw significant growth, increasing by 14.1% to reach $94.43 billion. This figure exceeded the FactSet consensus estimate of $92.13 billion. UnitedHealthcare revenue rose by 12.4% to $70.8 billion, while Optum revenue experienced an impressive 24.2% increase to $59.5 billion.

Medical Costs and Guidance for 2024

The medical care ratio, which denotes the ratio of medical costs to premium revenue, stood at 85%, slightly higher than the expected 84.1%. Despite this, UnitedHealth Group reiterated its guidance range for adjusted EPS of $27.50 to $28.00 and revenue of $400 billion for 2024.

However, the company did mention the potential impact on earnings when the sale of its Brazil operations concludes in the first half of 2024.

Positive Market Performance

Over the past three months, UnitedHealth Group's stock has seen a modest increase of 2.7%. In comparison, the Health Care Select Sector SPDR ETF has surged by 8.9%, while the Dow Jones Industrial Average has experienced a noteworthy jump of 12.1%.