UnitedHealth Q3 Earnings: Revenue And EPS Beat, Revises Annual Profit Guidance As Change Healthcare Cyberattack Still Bites

On Tuesday, UnitedHealth Group UNH reported better-than-expected third-quarter 2024 earnings but lowered the upper end of its annual EPS outlook.

The company reported adjusted EPS of $7.15, up from $6.56 a year ago, beating the consensus of $7.00.

UnitedHealth’s revenues increased nearly $8.5 billion (+9.1% Y/Y) to $100.8 billion, beating the consensus of $99.28 billion. This was led by an expansion in the number of people served domestically at Optum and UnitedHealthcare.

Third-quarter earnings from operations were $8.7 billion, including $0.3 billion in unfavorable cyber attack effects. Adjusted earnings from operations of $9.0 billion include the Change Healthcare business disruption impacts, excluding the cyberattack direct response costs.

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UnitedHealth reported a medical cost ratio (MCR) of 85.2% for the third quarter, compared to 82.3% last year. A lower ratio typically indicates higher profitability.

The previously noted CMS Medicare funding reductions, medical reserve development effects, and business and member mix contributed to the increase. The company had no favorable earnings impacting medical reserve development in the quarter.

UnitedHealthcare reported revenue of $74.9 billion, up from $69.9 billion a year ago, reflecting growth in the number of people served domestically.

Year to date, the number of consumers served domestically with the company’s commercial offerings grew by 2.4 million to 29.7 million.

Optum reported $63.9 billion in revenue for the second quarter, up from $56.7 billion a year ago.

Guidance: UnitedHealth expects a 2024 net profit of $15.50-$15.75 per share, down from the prior range of $15.95-$16.40, reflecting the South America operations disposition activities reported in the first half of 2024 and Change Healthcare cyberattack impacts.

The company’s adjusted EPS outlook of $27.50-$27.75 versus consensus of $27.70 continues within the $27.50 to $28.00 range established nearly a year ago, even as it absorbs an estimated $0.75 per share of business disruption impacts for the affected Change Healthcare services, which have increased ~$0.10 per share from the estimate provided last quarter.

Earlier, UnitedHealth expected adjusted EPS of $27.50-$28.00.

Price Action: UNH stock is down 3.70% at $583.00 during the premarket session on the last check Tuesday.

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