- UnitedHealth shares reel from medical cost over 85%.
- Third quarter earnings saw a decrease in profits due to a cyberattack.
- The health insurer and healthcare company beats third-quarter consensus on both the top and bottom lines.
- Adjusted EPS and revenue increase 9% year over year.
UnitedHealth Group (UNH)with the largest participation in the Dow Jones Industrial Average (DJIA)fell 9% on Tuesday after the largest U.S. health insurer reported that costs in the third quarter exceeded the previous projection.
The medical cost ratio, which compares insured costs to premiums paid, rose to 85.2% for the quarter ending in September. This compares notably to the prior-year quarter in which UnitedHealth saw a medical cost ratio of 82.3%. Wall Street had expected a ratio of 84.4% in the third quarter.
The Dow Jones fell half a percentage point on the news and was driven lower by another earnings report from Johnson & Johnson (JNJ). However, the Dow member’s earnings Goldman Sachs (GS) They helped the Wall Street bank rise 3%. The DJIA hit a new all-time high on Monday.
UnitedHealth Earnings News
Despite the negative news about rising healthcare costs, UnitedHealth’s top and bottom lines for the third quarter were quite impressive. The Minnesota-based insurer, which also has a managed care arm, reported adjusted EPS higher by 1.7%. Revenue in the quarter also beat Wall Street’s average projection by 1.5%.
UnitedHealth earned $7.15 in adjusted EPS on revenue of $100.8 billion. This equates to a 9% year-over-year increase in both adjusted EPS and revenue.
UNH’s stock performance is weighed by its full-year 2024 net income outlook of between $15.50 and $15.75 per share, reflecting charges at its South American operations and a costly cyberattack that hit its Change unit. Healthcare. That last unit represents at least $0.75 per share in costs.
Management lowered its full-year adjusted EPS outlook to between $27.50 and $27.75, down from a previous upper range of $28.00.
A good sign for shareholders is that the operating cost ratio fell from 15% a year ago to 13.2% in the quarter.
Insurance unit UnitedHealthcare saw its revenue increase by 7.2% year-over-year, while its healthcare services unit Optum saw a gain of 12.6% year-over-year.
UnitedHealth Stock Forecast
UNH stock has broken its 100-day SMA on Tuesday. This is a significant event. It means that the market will now look for the 200-day SMA near $525 as the nearest support. That level is in line with a high range not seen since May.
Longer-term support between $465 and $480 that held most of the time in the first half of the year also comes into view. The lowest price of the year at $436.38 on April 12 can probably be ruled out. Healthcare premiums can be adjusted, and the overall business is extremely healthy in terms of turnover.
The market will forget this earnings report once UNH stock breaks above the 50-day SMA, which is currently near $583.
UNH Stock Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
