UnitedHealth Group (UNH) reported better-than-expected results for the third quarter of FY24. The health insurance company’s adjusted earnings grew by 9% year over year to $7.15 per share, beating analysts’ consensus estimate of $7.06 per share. However, shares of UNH dropped in pre-market trading as its medical care ratio increased to 85.2% in Q3, compared to 82.3% in the same period last year.
The medical care ratio is a metric to measure medical costs as a percentage of the total insurance premiums collected by the company. A rise in this ratio indicated that UNH’s medical costs increased in the quarter.
UNH’s Health Insurance Business Continues to Drive Revenue Growth
Along with the increase in earnings, the company’s revenues also grew by 9.2% year-over-year to $100.8 billion, surpassing analysts’ expectations of $99.2 billion. The rise in the company’s revenues in the third quarter was driven by its insurance business, UnitedHealthcare, and its direct healthcare business, Optum.
In fact, UnitedHealthcare clocked revenues of $74.9 billion in Q3 and comprised more than 70% of UNH’s revenues.
UNH Reiterates FY24 Outlook
For FY24, management expects adjusted net earnings between $27.50 and $27.75 per share, compared to consensus estimates of $27.69.
Moreover, UNH projects GAAP EPS to be between $15.50 and $15.75 per share. This estimate takes into account the sale of its South American business reported in the first half of 2024, as well as the effects of the cyberattack on Change Healthcare.
What Is the Price Target for UNH Stock?
Analysts remain bullish about UNH stock, with a Strong Buy consensus rating based on a unanimous 21 Buys. Over the past year, UNH has increased by more than 10%, and the average UNH price target of $625.39 implies an upside potential of 3.3% from current levels. These analyst ratings are likely to change following UNH’s results today.
