$UnitedHealth(UNH)$ is expected to release its quarterly earnings result for fiscal Q1 2025 on 17 April 2025 before the market open.
The consensus estimate for the revenues are expected to reach $111.01 billion, which would represent an increase of 11.2% from the same quarter last year.
The earnings per share consensus estimate would be anticipated to come in at $7.29 per share which would represent an increase of 5.2% compared to same period one year ago.
UnitedHealth (UNH) Last Neutral Earnings Call Saw Share Price Increase By 7.85%
UNH last neutral earnings call on 16 Jan 2025 saw its share price increase by 7.85%.
The earnings call highlighted strong revenue growth in various segments, operational efficiencies, and successful expansion in value-based care and pharmacy services. However, it also acknowledged challenges such as increased medical care ratios, cyberattack disruptions, and external pressures from Medicare rate cuts and high drug costs.
UnitedHealth (UNH) Guidance
In the UnitedHealth Group's fourth-quarter earnings call for 2024, the company reported over $400 billion in revenues and adjusted earnings per share of $27.66, aligning well within their projected outlook. Despite various challenges, including a $5 billion gap from medical care ratio deviations and nearly $1 billion in disruptions from a cyberattack, the company managed to deliver these results. For 2025, UnitedHealth Group projects revenues approaching $340 billion with a medical care ratio of 86.5%, reflecting an increase of 100 basis points from 2024 due to factors like IRA impacts and Medicare funding cuts. The company plans to serve an additional 5.4 million value-based care patients and generate cash flow from operations nearing $33 billion. They also aim to pass 100% of PBM rebates to customers by 2028.
The emphasis remains on enhancing consumer experience and leveraging digital tools, evidenced by a 66% increase in mobile app visits. Despite external pressures, UnitedHealth Group maintains a strong outlook, focusing on value-based care and strategic growth initiatives.
Key Factors to Watch for UNH Q1 2025 Earnings
Revenue Growth
2024 revenues exceeded $400 billion with adjusted earnings per share of $27.66, well within the outlook ranges set over a year ago.
I think we might want to monitor performance in UnitedHealthcare (insurance) and Optum (health services).
Optum Health revenues grew to about $105 billion in 2024 and are expected to approach $117 billion in 2025. Optum Health will serve about 5.4 million value-based care patients in 2025, a growth of 650,000 from 2024.
Optum’s contributions (pharmacy benefit management, data analytics, and care delivery) are critical drivers of growth. Optum’s revenues grew to over $130 billion in 2024 and are projected to be about $146 billion in 2025.
Enrollment trends in Medicare Advantage, Medicaid, and employer-sponsored plans. Optum Rx customer retention exceeded 98%, with a record 750 new clients.
Medical Cost Management
The medical loss ratio (MLR), which measures healthcare costs relative to premiums. A lower MLR indicates better profitability. Operating cost ratio improved by about 150 basis points over the prior year, supported by AI-driven initiatives.
Regulatory and Policy Impacts
Changes in government reimbursement rates (Medicare/Medicaid), drug pricing policies, or antitrust scrutiny (e.g., acquisitions).
Margins and Profitability
Optum’s operating margins and UnitedHealthcare’s underwriting efficiency. Full-year revenues in 2024 approached $300 billion and are expected to approach $340 billion in 2025.
Impacts of inflation on labor and supply costs.
UnitedHealth (UNH) Price Target
Based on 22 Wall Street analysts offering 12 month price targets for UnitedHealth in the last 3 months. The average price target is $636.58 with a high forecast of $700.00 and a low forecast of $560.00. The average price target represents a 9.08% change from the last price of $583.59.
I think in order for UNH to give investors a better price target in the future, we need to consider the following factors :
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Growth Opportunities: Expansion in home health, telehealth, and international markets.
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Risks: Regulatory scrutiny (e.g., potential PBM reforms), competition, and macroeconomic pressures.
These are important especially with the tariffs that is going to be implemented on the pharmaceuticals sector, UNH might gain from these impact but we will need to see how UNH navigate its expansion plan.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how UNH have continued to trade above the 50-day and 200-day period, we can see that RSI is showing a strong momentum on the back of investor sentiment increasing, it is currently in the overbought region.
We could be expecting more investor confidence as the market grapple with new tariffs announcement for sectoral like pharmaceuticals, this might be a good news for UNH, as it could gain from it.
I think we might see some trade volatilty as investors start to position for UNH.
Summary
UNH’s historical execution and diversified business model position it as a healthcare leader. Future earnings will hinge on cost management, policy dynamics, and Optum’s innovation.
I think Optum’s performance would continue to be a key driver for UNH earnings, and UNH also need to watch its cost management.
Appreciate if you could share your thoughts in the comment section whether you think UNH could surprise with a much better earnings than Q4 2024.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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