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UnitedHealth (UNH)
NYSE:UNH
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UnitedHealth
(NYSE:UNH)65Neutral
Positive Factors
Earnings
The updated risk adjustment model is already being implemented, which mitigates potential negative effects on earnings.
Valuation
UnitedHealth Group is trading below its historical average valuation, which may present a potential opportunity for investors relative to its diversified peers.
Negative Factors
Regulatory Scrutiny
The Department of Justice has opened a new investigation into UnitedHealth Group focused on its billing practices, raising concerns about overpayments in the Medicare Advantage program.
UnitedHealth (UNH) vs. S&P 500 (SPY)
Market Cap
$434.13B
Dividend Yield1.75%
Average Volume (3M)5.00M
Price to Earnings (P/E)30.6
Beta (1Y)0.02
Revenue Growth8.35%
EPS Growth-35.14%
CountryUS
Employees400,000
SectorHealthcare
Sector Strength74
IndustryMedical Service Plans
Share Statistics
EPS (TTM)15.54
Shares Outstanding914,712,340
10 Day Avg. Volume7,123,152
30 Day Avg. Volume4,997,190
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.08
Price to Cash Flow (P/CF)N/A
P/FCF Ratio125.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$632.26Price Target Upside33.22% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering23
UnitedHealth Business Overview & Revenue Model
Company DescriptionUnitedHealth Group Incorporated (UNH) is a diversified healthcare and well-being company based in the United States. It operates primarily through two business platforms: UnitedHealthcare, which offers health benefits, and Optum, which provides healthcare services. UnitedHealthcare is one of the largest providers of health insurance in the US, serving individuals, employers, and government entities. Optum delivers care through networks and technology-enabled services, focusing on pharmacy care services, healthcare delivery, and health technology.
How the Company Makes MoneyUnitedHealth Group makes money primarily through its two segments: UnitedHealthcare and Optum. UnitedHealthcare generates revenue by providing health insurance products and services, including commercial health plans for individuals and employers, Medicare and Medicaid plans, and global health services. This segment earns money through premiums, fees, and other revenues from its health plans. Optum contributes to UnitedHealth Group's revenue by offering a range of healthcare services. OptumHealth provides care delivery and management services, OptumInsight offers data analytics and consulting services, while OptumRx provides pharmacy care services. Revenue from Optum is derived from service fees, consulting fees, and pharmacy service revenues. The company also benefits from strategic partnerships and acquisitions that enhance its service offerings and expand its market reach.
UnitedHealth Financial Statement Overview
Summary
UnitedHealth exhibits strong revenue growth and solid cash flow management, but faces challenges with declining net profit margins and return on equity. The balance sheet remains robust with moderate leverage, providing a stable foundation for future growth. Focus should be on enhancing profitability and maximizing shareholder returns.Income Statement
UnitedHealth has demonstrated strong revenue growth with a consistent increase in total revenue over the years, reaching $400.3 billion in 2024 from $367.5 billion in 2023, resulting in a revenue growth rate of 8.9%. The gross profit margin slightly improved from 23.6% in 2023 to 22.3% in 2024, while EBIT margin remained stable at approximately 8.1%. The net profit margin decreased from 6.1% in 2023 to 3.6% in 2024, which indicates a potential area of concern. Overall, the company shows strong revenue growth trends but with a slight decrease in profitability.85
Very Positive
Balance Sheet
UnitedHealth's balance sheet is robust with a debt-to-equity ratio of 0.74 in 2024, indicating moderate leverage. The equity ratio is 32.9%, showing a healthy balance of equity to total assets. Return on equity, however, decreased from 25.2% in 2023 to 14.7% in 2024, suggesting reduced profitability on shareholders' equity. Despite solid equity and asset management, the decline in ROE may indicate potential challenges in maximizing shareholder value.80
Positive
Cash Flow
The company has maintained a positive free cash flow, although it decreased from $25.7 billion in 2023 to $20.7 billion in 2024, reflecting a free cash flow growth rate of -19.5%. The operating cash flow to net income ratio improved to 1.68 in 2024, indicating strong cash generation relative to net income. The free cash flow to net income ratio is 1.44, demonstrating effective cash flow management. Despite a decline in free cash flow growth, the overall cash flow position remains solid.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 400.28B | 367.53B | 322.13B | 285.27B | 255.64B | Gross Profit |
| 89.40B | 86.87B | 77.59B | 67.33B | 65.50B | EBIT |
| 32.29B | 32.36B | 28.43B | 23.97B | 22.41B | EBITDA |
| 9.77B | 32.52B | 31.84B | 27.07B | 25.30B | Net Income Common Stockholders |
| 14.40B | 22.38B | 20.12B | 17.29B | 15.40B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 29.11B | 29.63B | 27.91B | 23.91B | 19.78B | Total Assets |
| 298.28B | 273.72B | 245.71B | 212.21B | 197.29B | Total Debt |
| 76.90B | 62.54B | 57.62B | 46.00B | 43.47B | Net Debt |
| 51.59B | 37.11B | 34.26B | 24.63B | 26.55B | Total Liabilities |
| 195.69B | 174.80B | 159.36B | 135.73B | 126.75B | Stockholders Equity |
| 98.27B | 88.76B | 77.77B | 71.76B | 65.49B |
| Cash Flow | Free Cash Flow | |||
| 20.70B | 25.68B | 23.40B | 19.89B | 20.12B | Operating Cash Flow |
| 24.20B | 29.07B | 26.21B | 22.34B | 22.17B | Investing Cash Flow |
| -20.53B | -15.57B | -28.48B | -10.37B | -12.53B | Financing Cash Flow |
| -3.51B | -11.53B | 4.23B | -7.46B | -3.59B |
UnitedHealth Technical Analysis
Negative
474.61
Price Trends
513.92
Negative
544.84
Negative
543.48
Negative
Market Momentum
-17.04
Positive
38.14
Neutral
45.87
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UNH, the sentiment is Negative. The current price of 474.61 is below the 20-day moving average (MA) of 502.65, below the 50-day MA of 513.92, and below the 200-day MA of 543.48, indicating a bearish trend. The MACD of -17.04 indicates Positive momentum. The RSI at 38.14 is Neutral, neither overbought nor oversold. The STOCH value of 45.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNH.
UnitedHealth Risk Analysis
UnitedHealth disclosed 20 risk factors in its most recent earnings report. UnitedHealth reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
UnitedHealth Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $82.86B | 17.98 | 6.11% | 4.10% | 4.02% | -43.51% | |
75 Outperform | $13.77B | 8.24 | 16.23% | 2.00% | 4.03% | 45.42% | |
72 Outperform | $16.81B | 15.00 | 26.22% | ― | 19.24% | 8.57% | |
69 Neutral | $85.25B | 25.69 | 0.84% | 1.80% | 25.19% | ― | |
67 Neutral | $31.70B | 26.31 | 7.37% | 1.35% | 10.70% | -49.85% | |
65 Neutral | $434.13B | 30.61 | 14.66% | 1.75% | 8.35% | -35.14% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
UNH
UnitedHealth
474.61
9.30
2.00%
CI
Cigna
308.86
-26.86
-8.00%
CVS
CVS Health
64.21
-6.89
-9.69%
HUM
Humana
262.78
-72.51
-21.63%
MOH
Molina Healthcare
306.49
-82.20
-21.15%
UNM
Unum Group
77.91
28.67
58.23%
UnitedHealth Earnings Call Summary
Earnings Call Date: Jan 16, 2025 | % Change Since: -12.66% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth in various segments, operational efficiencies, and successful expansion in value-based care and pharmacy services. However, it also acknowledged challenges such as increased medical care ratios, cyberattack disruptions, and external pressures from Medicare rate cuts and high drug costs.Highlights
Strong Financial Performance
2024 revenues exceeded $400 billion with adjusted earnings per share of $27.66, well within the outlook ranges set over a year ago.
Optum Health Growth
Optum Health revenues grew to about $105 billion in 2024 and are expected to approach $117 billion in 2025.
Significant Growth in Value-Based Care
Optum Health will serve about 5.4 million value-based care patients in 2025, a growth of 650,000 from 2024.
Optum Rx Expansion
Revenues grew to over $130 billion in 2024 and are projected to be about $146 billion in 2025.
Record Client Retention and New Business Acquisition
Optum Rx customer retention exceeded 98%, with a record 750 new clients.
UnitedHealthcare Revenue Growth
Full-year revenues in 2024 approached $300 billion and are expected to approach $340 billion in 2025.
Operational Efficiency Improvements
Operating cost ratio improved by about 150 basis points over the prior year, supported by AI-driven initiatives.
Lowlights
Increased Medical Care Ratio
The 2024 medical care ratio was 150 basis points above the original outlook, creating a nearly $5 billion gap.
Challenges from Cyberattack
Nearly $1 billion in business disruption impact due to the Change Healthcare cyberattack.
Impact of Medicare Rate Cuts
The first year of the 3-year CMS Medicare rate cuts posed significant challenges.
Higher Drug Costs
A more rapid than expected acceleration in prescribing high-cost medications impacted financial performance.
Hospital Coding Intensity
An aggressive upshift in hospital coding intensity contributed to increased costs.
Company Guidance
In the UnitedHealth Group's fourth-quarter earnings call for 2024, the company reported over $400 billion in revenues and adjusted earnings per share of $27.66, aligning well within their projected outlook. Despite various challenges, including a $5 billion gap from medical care ratio deviations and nearly $1 billion in disruptions from a cyberattack, the company managed to deliver these results. For 2025, UnitedHealth Group projects revenues approaching $340 billion with a medical care ratio of 86.5%, reflecting an increase of 100 basis points from 2024 due to factors like IRA impacts and Medicare funding cuts. The company plans to serve an additional 5.4 million value-based care patients and generate cash flow from operations nearing $33 billion. They also aim to pass 100% of PBM rebates to customers by 2028. The emphasis remains on enhancing consumer experience and leveraging digital tools, evidenced by a 66% increase in mobile app visits. Despite external pressures, UnitedHealth Group maintains a strong outlook, focusing on value-based care and strategic growth initiatives.UnitedHealth Corporate Events
Business Operations and StrategyFinancial Disclosures
UnitedHealth Projects Strong Financial Outlook for 2025
Positive
Dec 3, 2024
UnitedHealth Group has released its financial outlook for 2025, projecting revenues between $450 billion and $455 billion, with net earnings per share ranging from $28.15 to $28.65. The company anticipates cash flows from operations to be around $32 billion to $33 billion. These projections are part of its strategic focus on improving health care delivery and efficiency, highlighted ahead of its Investor Conference.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.