UnitedHealth stock surges after earnings beat, another raised outlook

Shares of UnitedHealth Group Inc. surged Friday, after the health insurer reported third-quarter profit and revenue that rose above expectations, and lifted its full-year outlook for a third-straight quarter.

Net income rose to $5.26 billion, or $5.55 a share, from $4.09 billion, or $4.28 a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share increased to $5.79 from $4.52 to beat the FactSet consensus of $5.43.

Revenue grew 11.8% to $80.89 billion, above the FactSet consensus of $80.52 billion. Revenue from premiums rose 13.2% to $64.49 billion, exceeding expectations of $63.77 billion, while products revenue increased 5.6% to $9.19 billion and services revenue were up 8.7% to $6.70 billion.

“Growth in the third quarter was driven by continued expansion in the number of people served throughout UnitedHealthcare and in the value-based care initiatives at Optum Health,” the company said in a statement.

The stock
UNH,
+1.99%
jumped 1.2% in premarket trading.

Total operating costs rose less than revenue, up 10.2% to $73.43 billion, as operating earnings as a percentage of revenue improved to 9.2% from 7.9%.

Medical care ratio, or medical costs as a percentage of premium revenue, was 81.6% compared with 81.5% last year, and with the FactSet consensus of 82.4%.

Total people served at its UnitedHealthcare business segment increased by 185,000 in the third quarter, led by community-based and senior offerings, while Optum revenue grew 17% to $46.6 billion.

Looking ahead, the company raised its 2022 adjusted EPS guidance range to $21.85 to $22.05 from the range of $21.40 to $21.90 provided in July. The original guidance range provided in November was $21.10 to $21.60.

The stock has gained 1.6% year to date through Thursday, while the SPDR Health Care Select Sector exchange-traded fund
XLV,
+2.33%
has lost 11.5% and the Dow Jones Industrial Average
DJIA,
+2.83%
has slumped 17.3%.

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