January 16, 2025
UnitedHealth Group Incorporated UNH reported fourth-quarter 2024 adjusted earnings per share (EPS) of $6.81, which surpassed the Zacks Consensus Estimate of $6.71. The bottom line advanced 10.6% year over year.
The strong fourth-quarter earnings were aided by domestic commercial membership and Medicare Advantage growth and improving operating efficiency. However, the upside was partly offset by elevated medical costs and a decline in membership across global commercial and Medicaid businesses.
Revenues rose 6.8% year over year to $100.8 billion. However, the top line missed the consensus mark by 1.4% due to lower-than-expected premiums,which is rare for the juggernaut.
UNH’s 2024 revenues of $400.3 billion increased from $371.6 billion a year ago on higher premiums and products but missed the Zacks Consensus Estimate of $401.7 billion. Full-year EPS of $27.66 rose from $25.12 in 2023 and beat the estimate of $27.59. Direct response costs from the cyberattack amounted to $2.2 billion, while total impacts were $3.1 billion.
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
UnitedHealth’s medical care ratio (MCR) was 85.5% in 2024, which deteriorated from 83.2% in 2023. The metric was higher than the Zacks Consensus Estimate of 85.07% and our estimate of 84.8%. MCR witnessed an increase due to the previously noted reductions in Medicare funding from CMS, timing of Medicaid redeterminations and changes in the member mix. Medical costs of $67 billion rose from $62.2 billion a year ago.
Fourth-quarter total operating costs of $93 billion escalated 7.3% year over year due to higher medical costs and the cost of products sold. The figure, however, came lower than our model estimate of $93.5 billion. The 2024 operating cost ratio improved to 13.2% from 14.7% in 2023 due to gains from business portfolio refinement, improvement in operating efficiencies and consumer experiences.
UnitedHealth’s operating earnings grew 1.1% year over year to $7.8 billion in the fourth quarter. However, the net margin deteriorated 30 bps year over year to 5.5%.
Revenues of the health benefits business of UnitedHealth, UnitedHealthcare , advanced 4.7% year over year to $74.1 billion in the fourth quarter on the back of an increase in domestic commercial membership growth. However, the metric missed the Zacks Consensus Estimate of $75.5 billion.
Earnings from operations amounted to $3 billion in the fourth quarter, down from $3.1 billion a year ago. Operating margin deteriorated 40 bps year over year to 4%.
Revenues in the Optum business line were $65.1 billion, which rose 9.4% year over year on the back of strong contributions from its sub-units. However, the figure fell short of the consensus mark of $67 billion.
Optum’s earnings from operations climbed to $4.8 billion from $4.6 billion a year ago. Operating margin of 7.4%, however, deteriorated 30 bps year over year.
The UnitedHealthcare business catered to 50.68 million people as of Dec. 31, 2024, which fell 3.9% year over year due to global commercial and Medicaid membership declines. Nevertheless, strength in domestic commercial and Medicare Advantage businesses provided some respite. The figure beat the Zacks Consensus Estimate of 50.36 million and our estimate of 49.86 million.
UnitedHealth exited the fourth quarter with cash and short-term investments of $29.11 billion, which declined from the 2023-end level of $29.63 billion.
Total assets of $298.28 billion increased from the $273.72 billion figure at 2023-end.
Long-term debt, less of current maturities, amounted to $72.36 billion, up from the $58.26 billion figure as of Dec. 31, 2023. Short-term borrowings and the current portion of long-term debt were $4.55 billion.
Total equity of $98.27 billion advanced from the 2023-end level of $94.42 billion.
UnitedHealth generated operating cash flows of $24.2 billion in 2024, which plunged from the prior-year figure of $29.1 billion.
UnitedHealth rewarded more than $16 billion to its shareholders in the form of share repurchases ($9 billion) and dividends ($7.5 billion) in 2024.
Management projects adjusted net EPS between $29.50 and $30 for 2025 compared with 2024 figure of $27.66. Net earnings are expected to be $25.85 - $26.45 billion, up from $2024 level of $14.41 billion.
Revenues are estimated between $450 billion and $455 billion in 2025, up from $400.3 billion in 2024. Operating cash flows are projected to be $32-$33 billion, up from $24.2 billion in 2024.
UnitedHealth currently has a Zacks Rank #3 (Hold).
Some better-ranked and promising stocks in the broader Medical sector are RadNet, Inc. RDNT, LifeStance Health Group, Inc. LFST and Medpace Holdings, Inc. MEDP, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
The Zacks Consensus Estimate for RadNet’s 2024 earnings indicates 16% year-over-year growth. RDNT beat earnings estimates in three of the trailing four quarters and met once, with an average surprise of 69.9%. The consensus mark for its 2024 revenues indicates 12.6% year-over-year growth.
The Zacks Consensus Estimate for LifeStance’s 2024 earnings indicates a 60.8% year-over-year improvement. LFST beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. The consensus mark for revenues implies 17.3% growth from the year-ago period.
The Zacks Consensus Estimate for Medpace’s 2024 earnings implies a 34.4% increase from the year-ago reported figure. MEDP beat earnings estimates in each of the trailing four quarters, with an average surprise of 14.7%. The consensus mark for its current-year revenues is pegged at $2.1 billion, which indicates an 11.8% year-over-year increase.
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