UnitedHealth posts Q4 earnings beat despite rising costs

jetcityimage/iStock Editorial via Getty Images Managed care bellwether UnitedHealth ( NYSE: UNH ) exceeded Wall Street forecasts with its financials for Q4 2023 on Friday as the group’s quarterly earnings per share rose ~16% YoY despite rising costs in its insurance arm and Optum business. However, as disclosed at its Investor Conference in November, the company reaffirmed its 2024 outlook for revenue at $400B–$403B and adj.

earnings per share at $27.50–$28.00. Yet, the pending sale of its Brazil operations will impact its net earnings by $7B this year. “UnitedHealth Group enters 2024 well prepared to build on our efforts to improve patient care and consumer experiences broadly, and to continue delivering strong and balanced growth,” CEO Andrew Witty remarked.

The group recorded $94.4B in revenue for the quarter with ~14% YoY growth as its insurance business, UnitedHealthcare, added $70.8B to the topline with ~12% YoY growth, exceeding Wall Street estimates, according to Bloomberg data. During the quarter, UnitedHealthcare’s membership base dropped to ~52.75M from ~52.78M at the end of Q3 2023 as its Medicaid enrollees slipped to ~7.8M from ~8.1M amid ongoing eligibility reviews.

For the full year, the company’s revenue climbed ~15% YoY to $371.6B as UnitedHealthcare brought $281.4B to the topline with ~13% YoY growth, while Optum added $226.6B with ~24% YoY growth. UNH’s net margin held steady at 5.8% even as its full year medical care ratio increased to 83.2% from 82% last year, mainly due to higher demand for outpatient care, particularly from seniors.

With strong cost discipline, UNH kept its operating cost ratio steady at 14.7%, in line with last year, while its quarterly medical care ratio stood at 85%, above the consensus. However, operating margins at UnitedHealthcare and Optum dropped to 4.4% and 7.7% from 4.7% and 8.3%, respectively. 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 ). More on UnitedHealth UnitedHealth Group: Preparing For Q4 Earnings UnitedHealth Could Be A Combination Of Dividend Growth And Capital Appreciation In 2024 UnitedHealth: A Dividend Grower To Consider For Your Portfolio UnitedHealth Non GAAP EPS of $6.16 beats by $0.17, revenue of $94.4B beats by $2.22B UnitedHealth set for Q4 2023 earnings amid cost concerns.