Mixed Bag for UnitedHealth: Q4 Earnings Beat, Revenues Fall Short

Core Insights - UnitedHealth Group Incorporated (UNH) reported strong fourth-quarter 2024 adjusted earnings per share (EPS) of $6.81, exceeding the Zacks Consensus Estimate of $6.71, marking a year-over-year increase of 10.6% [1] - The company's revenues rose 6.8% year over year to $100.8 billion, although this figure missed the consensus mark by 1.4% due to lower-than-expected premiums [2] - For the full year 2024, UNH's revenues reached $400.3 billion, up from $371.6 billion in 2023, but fell short of the Zacks Consensus Estimate of $401.7 billion [3] Financial Performance - The medical care ratio (MCR) for 2024 was 85.5%, an increase from 83.2% in 2023, exceeding the Zacks Consensus Estimate of 85.07% [4] - Total operating costs for the fourth quarter were $93 billion, a 7.3% increase year over year, but lower than the model estimate of $93.5 billion [5] - Operating earnings grew 1.1% year over year to $7.8 billion in the fourth quarter, while the net margin decreased by 30 basis points to 5.5% [6] Business Segment Performance - Revenues from the health benefits business, UnitedHealthcare, increased 4.7% year over year to $74.1 billion, but missed the Zacks Consensus Estimate of $75.5 billion [7] - The Optum business line reported revenues of $65.1 billion, a 9.4% year-over-year increase, although it fell short of the consensus mark of $67 billion [8] - Membership in the UnitedHealthcare business decreased by 3.9% year over year to 50.68 million, primarily due to declines in global commercial and Medicaid memberships [9] Financial Position - As of December 31, 2024, UnitedHealth had cash and short-term investments of $29.11 billion, down from $29.63 billion at the end of 2023 [10] - Total assets increased to $298.28 billion from $273.72 billion at the end of 2023, while long-term debt rose to $72.36 billion from $58.26 billion [10] - Total equity improved to $98.27 billion from $94.42 billion at the end of 2023, with operating cash flows for 2024 at $24.2 billion, down from $29.1 billion in the prior year [11] Capital Deployment - In 2024, UnitedHealth returned over $16 billion to shareholders through share repurchases ($9 billion) and dividends ($7.5 billion) [12] 2025 Outlook - Management projects adjusted net EPS for 2025 to be between $29.50 and $30, with revenues estimated between $450 billion and $455 billion [13]