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UnitedHealth Group Incorporated (UNH) reported third-quarter 2024 adjusted earnings per share (EPS) of $7.15, which surpassed the Zacks Consensus Estimate by 1.9%. The bottom line advanced 9% year over year. Revenues rose 9.1% year over year to $100.8 billion, attributable to a higher number of people served through the UnitedHealthcare and Optum businesses. The top line beat the consensus mark by 1.3%. The quarterly performance was aided by domestic commercial membership growth, value-based care expansion ...

Key TakeawaysUnitedHealth Group shares declined Tuesday after the company lowered its full-year earnings per share (EPS) forecast.In decreasing its earnings outlook, the company cited the impact of a cyberattack against its Change Healthcare division in February.Third-quarter revenue beat expectations, while earnings slightly missed. Shares of UnitedHealth Group (UNH) tumbled Tuesday after the company lowered its full-year profit outlook to reflect the impact of a cyberattack against its Change Healthcare d ...

Financial Data and Key Metrics Changes - Revenues for Q3 2024 reached $101 billion, growing more than 9% year-over-year, with strong growth in both Optum and UnitedHealthcare [20][21] - Cash flows from operations were $14 billion, representing 2.2 times net income, with year-to-date cash flows nearing $22 billion [22] - The adjusted earnings outlook for 2024 has been narrowed to a range of $27.50 to $27.75 per share, reflecting business disruption impacts and care patterns [25] Business Line Data and Key Metrics Changes - OptumHealth revenues grew by over $2 billion, approaching $26 billion, driven by an increase in care services and patients served, particularly in home care [20] - OptumRx revenues increased by over $5 billion to more than $34 billion, attributed to strength in pharmacy care offerings and growth in pharmacy benefits management [20] - OptumInsight revenues were stable, nearing $5 billion, with a revenue backlog of nearly $33 billion, increasing by more than $1 billion from last year [20] Market Data and Key Metrics Changes - UnitedHealthcare's domestic commercial business added over 2.4 million people through Q3 2024, with favorable selling season indications for 2025 [21] - The Medicare Advantage plans for 2025 are designed to provide benefit stability while addressing CMS funding cuts and expected care patterns [21] - Medicaid expansion and retention performance remains strong, with recent awards in several states, including Massachusetts and Florida [22] Company Strategy and Development Direction - The company aims for long-term growth of 13% to 16%, balancing investments in future capabilities with managing known challenges [7][29] - A focus on transitioning to value-based care is emphasized, with efforts to improve patient outcomes and reduce costs [10][12] - The launch of a national gold card program aims to reduce prior authorizations, enhancing care quality and affordability [8] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future growth despite challenges in the healthcare sector, including Medicare rate cuts and Medicaid member redeterminations [7][28] - The company is committed to investing in technology and AI to modernize operations and improve consumer experiences [9][29] - Management acknowledges the need to address external pressures while maintaining a focus on long-term value creation [42][43] Other Important Information - The company has returned $9.6 billion to shareholders through dividends and share repurchases, while investing over $11 billion in strategic opportunities [22] - Business disruption costs related to Change Healthcare are estimated to be about $0.75 per share for the full year 2024, an increase from previous estimates [24] Q&A Session Summary Question: Impact of care patterns on 2025 - Management discussed the rapid acceleration in specialty drug prescribing and its implications for 2025, noting that pricing for 2025 has been adequately planned despite unexpected increases [31][35] Question: Growth in Medicare Advantage - Medicare Advantage is a critical part of the company's strategy, with a focus on maintaining stability for consumers and leveraging value-based care partnerships [50][56] Question: Medicaid business performance - The duals business outlook remains positive, with expectations for state rate adjustments to catch up with current cost trends [61] Question: Commercial business pricing strategy - The commercial business has been priced with respect to cost trends, focusing on pharmacy and hospital unit costs while ensuring competitive rates [68][71]

Cyberattacks can have a long impact, as UnitedHealth’s Tuesday (Oct. 15) earnings call revealed.In February 2024, UnitedHealth Group Inc.’s Change Healthcare unit suffered a far-reaching cyberattack. Nearly eight months later, and the healthcare giant’s executives on Tuesday shared that the company is still being forced to cut its earnings guidance due to lingering disruptions from the ransomware attack whose fallout crippled the U.S. healthcare system.Per United’s financials, the February hack has shaved o ...

UnitedHealth Group (UNH) reported $100.82 billion in revenue for the quarter ended September 2024, representing a year-over-year increase of 9.2%. EPS of $7.15 for the same period compares to $6.56 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $99.51 billion, representing a surprise of +1.31%. The company delivered an EPS surprise of +1.85%, with the consensus EPS estimate being $7.02.While investors scrutinize revenue and earnings changes year-over-year and how they compare wi ...

Earnings Performance - UnitedHealth Group reported quarterly earnings of $7 15 per share, beating the Zacks Consensus Estimate of $7 02 per share, representing a 1 85% earnings surprise [1] - The company's earnings increased from $6 56 per share a year ago, with adjusted figures for non-recurring items [1] - Over the last four quarters, the company has consistently surpassed consensus EPS estimates [1] Revenue Growth - UnitedHealth posted revenues of $100 82 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1 31% [1] - This represents an increase from year-ago revenues of $92 36 billion [1] - The company has topped consensus revenue estimates in each of the last four quarters [1] Stock Performance - UnitedHealth shares have gained approximately 15% since the beginning of the year, underperforming the S&P 500's gain of 22 9% [2] - The stock's immediate price movement will depend on management's commentary during the earnings call [2] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $6 92 on $101 67 billion in revenues [4] - For the current fiscal year, the consensus EPS estimate is $27 68 on $399 71 billion in revenues [4] - The estimate revisions trend for UnitedHealth was unfavorable ahead of the earnings release, resulting in a Zacks Rank 4 (Sell) [4] Industry Context - The Medical - HMOs industry, to which UnitedHealth belongs, is currently in the bottom 6% of the Zacks industries [5] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [5] - The Joint Corp, another company in the same industry, is expected to report quarterly earnings of $0 04 per share, representing a year-over-year change of +180% [5]

[Q3 2024 Performance Overview](index=1&type=section&id=UnitedHealth%20Group%20Reports%20Third%20Quarter%202024%20Results) [Financial Highlights](index=1&type=section&id=Quarterly%20Financial%20Performance) UnitedHealth Group reported strong Q3 2024 results with **$100.8 billion** in revenues and **$8.7 billion** in earnings, impacted by cyberattack Q3 2024 Consolidated Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $100.8 billion | $92.4 billion | +$8.4 billion | | **Earnings from Operations** | $8.7 billion | $8.5 billion | +$0.2 billion | | **Adjusted Earnings from Operations** | $9.0 billion | $8.5 billion | +$0.5 billion | | **Net Margin** | 6.0% | 6.3% | -0.3 ppt | | **Diluted EPS** | $6.51 | $6.24 | +$0.27 | | **Adjusted Diluted EPS** | $7.15 | $6.56 | +$0.59 | - The Change Healthcare cyberattack had a significant impact, with Q3 earnings including **$0.3 billion** in unfavorable effects. Adjusted earnings of **$7.15 per share** exclude **$0.28** in direct response costs but include **$0.12** in business disruption impacts[1](index=1&type=chunk)[4](index=4&type=chunk) Key Operational Ratios | Ratio | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | **Medical Care Ratio** | 85.2% | N/A | 82.3% | | **Operating Cost Ratio** | 13.2% | 13.3% | 15.0% | | **Days Claims Payable** | 47.4 | 45.2 | 50.7 | - Cash flows from operations were strong at **$14.0 billion**, or **2.2 times net income**. The company returned over **$9.6 billion** to shareholders through dividends and share repurchases in the first nine months of 2024, and the return on equity was **26.3%** for the quarter[6](index=6&type=chunk) [2024 Outlook](index=1&type=section&id=2024%20Outlook) The company updated its full-year 2024 earnings outlook, absorbing increased cyberattack disruption impacts Full Year 2024 Earnings Per Share Outlook | Metric | Outlook Range | | :--- | :--- | | **Net Earnings per Share** | $15.50 to $15.75 | | **Adjusted Net Earnings per Share** | $27.50 to $27.75 | - The adjusted earnings outlook absorbs an estimated **$0.75 per share** of business disruption impacts from the Change Healthcare cyberattack, which is an increase of **~$0.10 per share** from the previous quarter's estimate[2](index=2&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) [UnitedHealthcare](index=3&type=section&id=UnitedHealthcare) UnitedHealthcare's revenue grew **$5 billion** to **$74.9 billion** in Q3 2024, driven by increased domestic consumers UnitedHealthcare Q3 Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $74.9 billion | $69.9 billion | +$5.0 billion | | **Earnings from Operations** | $4.2 billion | $4.6 billion | -$0.4 billion | | **Operating Margin** | 5.6% | 6.6% | -1.0 ppt | - The number of consumers served by domestic commercial offerings grew by **2.4 million** year-to-date, reaching a total of **29.7 million**[9](index=9&type=chunk) - The company serves **9.4 million** seniors and people with complex needs. Its 2025 Medicare Advantage plans will reach **96%** of eligible beneficiaries[9](index=9&type=chunk) - Total people served by state-based community offerings (Medicaid) grew to **7.5 million**, stabilizing after the conclusion of state eligibility redeterminations[9](index=9&type=chunk) [Optum](index=4&type=section&id=Optum) Optum's revenues grew **$7.2 billion** to **$63.9 billion** in Q3 2024, with strong segment performance and **$4.5 billion** in operating earnings Optum Q3 Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $63.9 billion | $56.7 billion | +$7.2 billion | | **Earnings from Operations** | $4.5 billion | $3.9 billion | +$0.6 billion | | **Adjusted Earnings from Operations** | $4.8 billion | $3.9 billion | +$0.9 billion | | **Operating Margin** | 7.0% | 6.9% | +0.1 ppt | Optum Health Optum Health's revenue increased **$2.1 billion** to **$25.9 billion**, driven by growth in value-based care and expanded services - Revenue grew due to an increase in patients under value-based care and the expansion of care types, including in-home and clinic services[13](index=13&type=chunk) Optum Insight Optum Insight's operating earnings were impacted by the cyberattack, recording **~$800 million**, with adjusted earnings of **$1 billion** - Operating earnings were **~$800 million**, while adjusted operating earnings were **$1 billion**. Both figures include a **$135 million** business disruption impact from the cyberattack, down from **$335 million** in Q2[13](index=13&type=chunk) - The revenue backlog grew by **more than $1 billion** over the last year, driven by new health system partnerships[13](index=13&type=chunk) Optum Rx Optum Rx delivered strong revenue growth of **$5.4 billion** to **$34.2 billion**, driven by new clients and expanded services - Revenue growth was attributed to new customers, expanded client relationships, and growth in specialty and community-based pharmacy services[14](index=14&type=chunk) - Adjusted scripts grew to nearly **410 million** in Q3 2024, compared to **380 million** in Q3 2023[14](index=14&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2024 total revenues increased to **$100.8 billion**, with net earnings of **$6.06 billion**, impacted by a **$8.33 billion** subsidiary sale loss Q3 Statement of Operations Highlights (in millions) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | **Total Revenues** | $100,820 | $92,361 | | **Earnings from Operations** | $8,708 | $8,526 | | **Net Earnings Attributable to UNH** | $6,055 | $5,841 | | **Diluted EPS** | $6.51 | $6.24 | Nine Months Statement of Operations Highlights (in millions) | Metric | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | | **Total Revenues** | $299,471 | $277,195 | | **Loss on sale of subsidiary** | $(8,331) | $— | | **Net Earnings Attributable to UNH** | $8,862 | $16,926 | | **Diluted EPS** | $9.53 | $18.01 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets grew to **$299.3 billion**, with long-term debt rising to **$74.1 billion** and total equity increasing Balance Sheet Highlights (in millions) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $299,309 | $273,720 | | Cash and short-term investments | $37,134 | $29,628 | | **Total Liabilities** | $194,854 | $174,801 | | Long-term debt | $74,101 | $58,263 | | **Total Equity** | $99,881 | $94,421 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Nine-month cash flows from operations were **$21.8 billion**, a decrease from prior year, with investing activities increasing to **$19.4 billion** Nine Months Cash Flow Highlights (in millions) | Metric | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | | **Cash flows from operating activities** | $21,835 | $34,261 | | **Cash flows used for investing activities** | $(19,408) | $(14,387) | | *Loans to care providers - cyberattack* | $(8,904) | $— | | **Cash flows from (used for) financing activities** | $4,830 | $(4,373) | | *Common share repurchases* | $(4,028) | $(6,500) | | *Dividends paid* | $(5,601) | $(5,023) | | **Net increase in cash** | $6,973 | $15,550 | [Supplemental Information](index=11&type=section&id=Supplemental%20Information) [Business Segment Financials (Revenue & Earnings)](index=11&type=section&id=Business%20Segment%20Financials) This section details Q3 2024 revenues and earnings by segment, with UnitedHealthcare at **$74.9 billion** and Optum at **$63.9 billion** Q3 2024 Revenues by Business (in millions) | Segment | Revenue | | :--- | :--- | | **UnitedHealthcare** | $74,853 | | **Optum** | $63,925 | | - Optum Health | $25,917 | | - Optum Insight | $4,931 | | - Optum Rx | $34,207 | Q3 2024 Earnings from Operations by Business (in millions) | Segment | Earnings from Operations | Adjusted Earnings from Operations | | :--- | :--- | :--- | | **UnitedHealthcare** | $4,212 | $4,212 | | **Optum** | $4,496 | $4,753 | | - Optum Health | $2,161 | $2,161 | | - Optum Insight | $791 | $1,048 | | - Optum Rx | $1,544 | $1,544 | - For Q3 2024, the total cyberattack impact on earnings from operations was **$475 million**, comprising **$341 million** in direct response costs and **$134 million** in business disruption impacts. These were primarily concentrated within the Optum Insight segment[37](index=37&type=chunk) [People Served and Performance Metrics](index=13&type=section&id=People%20Served%20and%20Performance%20Metrics) As of September 30, 2024, UnitedHealthcare served **50.7 million** people globally, with Optum showing growth across its segments UnitedHealthcare People Served (in thousands) as of Sep 30, 2024 | Category | People Served | | :--- | :--- | | **Total Commercial - Domestic** | 29,730 | | **Medicare Advantage** | 7,810 | | **Medicaid** | 7,450 | | **Total UnitedHealthcare - Medical** | 50,665 | Optum Performance Metrics as of Sep 30, 2024 | Metric | Value | | :--- | :--- | | **Optum Health Consumers Served** | 104 million | | **Optum Insight Contract Backlog** | $32.8 billion | | **Optum Rx Quarterly Adjusted Scripts** | 407 million | [Reconciliation of Non-GAAP Financial Measures](index=14&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) Non-GAAP measures clarify performance, adjusting for amortization, South American operations, and cyberattack costs, increasing Q3 diluted EPS from **$6.51** to **$7.15** - Non-GAAP measures are adjusted for three main categories: Intangible Amortization, South American Impacts (related to the sale of operations), and Direct Response Costs from the cyberattack[43](index=43&type=chunk) Q3 2024 EPS Reconciliation (per share) | Description | Value | | :--- | :--- | | **Diluted EPS (GAAP)** | **$6.51** | | Intangible amortization | $0.46 | | Tax effect of amortization | $(0.11) | | South American impacts | $0.01 | | Direct response costs - cyberattack | $0.37 | | Tax effect of response costs | $(0.09) | | **Adjusted Diluted EPS (Non-GAAP)** | **$7.15** | - The total cyberattack impact per share in Q3 2024 was **$0.40**, which includes **$0.12 per share** from business disruption impacts (reduced revenue) and the direct response costs[47](index=47&type=chunk)

Group 1 - The core viewpoint indicates that UnitedHealth's financial performance is expected to improve in Q3 2024, with revenue projected at $99.3 billion, a significant increase from $92.36 billion in Q3 2023 [1] - Analysts predict a diluted EPS of $6.66 for Q3 2024, up from $6.24 in the same quarter last year [1] - Net income is anticipated to rise to $6.16 billion in Q3 2024, compared to $5.84 billion in Q3 2023 [1] Group 2 - Revenue from UnitedHealth's Optum division increased by 11.7% year-over-year to $62.9 billion last quarter, driven by growth in Optum Health patients and Optum Rx pharmacy service users [2] - For the upcoming quarter, analysts expect Optum revenue to reach $63.7 billion, reflecting a 12% increase [2] - The number of patients in Optum Health and those utilizing OptumRx is also projected to grow compared to the previous year [2] Group 3 - UnitedHealth is involved in a lawsuit against the Centers for Medicare & Medicaid Services (CMS) regarding the downgrade of its Medicare Advantage plans' quality ratings [3] - The company claims that the CMS rating was based on an "arbitrary and capricious" assessment of a single phone call [3] - As of the end of Q2, UnitedHealth had 7.7 million members enrolled in Medicare Advantage plans, with potential changes expected during the open enrollment period starting October 15 [3] - UnitedHealth shares have appreciated nearly 14% in 2024, closing at $598.05 [3]

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Kindly note that our content on Seeking Alpha and other platforms doesn't constitute financial advice ...