Core Insights - UnitedHealth reported strong Q3 earnings, exceeding market expectations and raising its guidance, indicating a potential recovery from previous lows [3][4][11] - The company’s revenue and profit growth signals a positive trend, with a 12% year-over-year revenue increase and a 4% increase in earnings per share [4][9] - Despite recent stock price recovery, UnitedHealth has significant upside potential in the coming years if operational improvements and customer growth continue [11][12] Financial Performance - Q3 revenue reached $113.161 billion, up from $100.820 billion in the same quarter last year, with a notable 16% increase in the UnitedHealthcare insurance segment [8] - The insurance segment's operating profit fell sharply from $4.2 billion to $1.8 billion, reflecting a profit margin drop from 5% to just over 2% [6][8] - Optum's revenue grew by approximately 8%, with OptumRx generating nearly $40 billion in revenue, a 16% increase year-over-year [5][8] Business Segments - The UnitedHealthcare insurance segment saw a 16% revenue increase, driven by pricing adjustments and a 1.5% increase in customer numbers [4][5] - The Medicare & Retirement segment experienced a significant 24% growth, contributing to the majority of new customers [5] - Optum Health's revenue remained flat at around $25 billion, indicating challenges in that segment [5][6] Profitability Challenges - The overall profit decline is attributed to rising medical costs, which increased by $14 billion, significantly impacting profit margins [8][9] - Management cited unfavorable cost trends and Medicare funding cuts as key factors for the profit pressure [7][9] - Despite the profit challenges, the company raised its adjusted EPS guidance for the year to at least $16.25, slightly above market consensus [9][10] Future Outlook - Analysts predict a significant recovery in profits over the next few years, with EPS expected to reach $26 by 2028 and $32 by 2029 [12] - If UnitedHealth can achieve these targets and maintain a P/E ratio of 18, the stock price could potentially rise to around $580 by 2029, representing a 55% increase from current levels [12] - The current dividend yield stands at 2.4%, adding to the overall attractiveness of the investment [12]