UnitedHealth stock jumps as profit tops estimates

UnitedHealth’s (NYSE:UNH) shares jumped in early trading on Tuesday after the health insurer's first quarter adjusted earnings per share topped Wall Street estimates.

Q1 revenues grew 8.6% Y/Y to $99.8B, with adjusted earnings per share amounting to $6.91 – both metrics exceeding analysts' expectations for the quarter.

Note that, adjusted earnings per share includes the $0.25 in business disruption impacts related to the recent cyberattack at the company’s Change Healthcare business, but excludes impacts from the sale of its Brazil operations and the estimated direct response costs of the cyberattack.

Q1 earnings from operations of $7.9B took a hit of $872M related to the breach, which disrupted services at pharmacies and hospitals across the U.S. The company swung to a net loss of $1.22B, or $1.53 a share, compared with a profit of $5.77B, or $5.95 a share, for the same period a year earlier.

The healthcare conglomerate revised its net profit forecast for full year 2024 to reflect the impact of the cyberattack and the Brazil sale. The group now expects net profit of $17.60 to $18.20 per share for the year, but has kept its adjusted net earnings forecast of $27.50 to $28.00 a share (consensus: $27.53) unchanged.

“This adjusted earnings per share outlook excludes the impacts of the direct response costs and Brazil sale, while including the estimated $0.30 to $0.40 per share of business disruption impacts for the affected Change Healthcare services,” UnitedHealth (UNH) said in the news release.

The group estimates full year 2024 impacts of $1.15-$1.35 a share related to the data breach. Total cyberattack impacts in the first quarter amounted to $0.74 per share, of which $0.49 per share were related to support direct response efforts and $0.25 in business disruption impacts. The company estimates direct response costs of $0.85 to $0.95 a share for full year 2024.

“The core story at UnitedHealth Group remains our colleagues delivering improved experiences for the people we serve and driving balanced growth even while swiftly and effectively addressing the attack on Change Healthcare,” CEO Andrew Witty noted.

With strong cost discipline, UNH kept its Q1 operating cost ratio steady at 14.1%, compared to 14.8% in 2023, while its quarterly medical care ratio stood at 84.3%, above the consensus.

Shares of the company rose 6.74% premarket on Tuesday

As the largest health insurer, UnitedHealth (UNH) sets the tone for its peers during the earnings season. Notable stocks to watch include Humana (HUM), Cigna (CI), CVS Health (CVS), and Alignment Healthcare (ALHC).