UnitedHealth Group (NYSE: $UNH) is a diversified healthcare company that operates in the US through four business segments: The company offers a variety of healthcare products and services, including consumer-oriented health benefit plans, care delivery and management services, software and information products, and pharmacy care services.
On April 16, 2024, UnitedHealth Group reported its first quarter 2024 results, demonstrating resilience in the face of the recent cyberattack on its Change Healthcare subsidiary.
UnitedHealth Group’s Q1 2024 Financial Highlights
In Q1 2024, UnitedHealth Group’s revenue surged to $99.8 billion, up 8.6% from the previous year, exceeding Wall Street’s forecast of $99.3 billion. This growth follows a trend from Q1 2023, which saw revenue at $91.9 billion. Operating earnings for the quarter amounted to $7.9 billion, with $872 million reflecting losses attributed to a cyberattack. Adjusted earnings, accounting for the disruptions caused by the cyberattack, totaled $8.5 billion.
The company experienced a net loss of $1.22 billion, translating to $1.53 per share under GAAP guidelines. That is a huge decrease compared to the previous year’s profit of $5.8 billion, or $5.95 per share. Adjusted earnings per share was $6.91, an increase from $6.26 in the corresponding quarter of the previous year, surpassing analysts’ estimate of $6.61
Cash flows from operations totaled $1.1 billion, impacted by approximately $3 billion due to the cyberattack response and timing of public sector cash receipts. The company ended the period with $28.414 billion in cash and equivalents.
UnitedHealth Group’s Q1 Business Insights
In Q1, UnitedHealth Group’s health benefits arm, UnitedHealthcare, saw revenues of $75.4 billion, up 7% YoY due to domestic membership growth, but fell short of the expected $75.5 billion. Earnings from operations reached $4.4 billion, a 2.3% YoY increase, surpassing the expected $4.3 billion, though the operating margin dropped to 5.8%.
Optum’s revenues surged to $61.1 billion, up 12.9% year-over-year, beating the consensus estimate of $59.9 billion. However, earnings from operations dropped 5.4% YoY to $3.5 billion, missing the consensus mark, and the operating margin declined to 5.8%.
UnitedHealth Group Declares Dividend
On February 23, 2024, UnitedHealth Group’s board announced a cash dividend of $1.88 per share for UNH common stockholders by March 11, 2024. Additionally, the company outlined in its Q1 earnings report that $4.8 billion was allocated to shareholders through dividends and share buybacks.
Outlook for 2024
The company expects 2024 net EPS in the range of $17.6 to $18.2, reflecting the impact of the Brazil operations sale and the costs related to the cyberattack. Adjusted net EPS is forecast to be between $27.50 and $28.00, indicating a 10.5% improvement from the 2023 figure of $25.12.
Revenues are estimated to be between $400 billion and $403 billion in 2024, the mid-point of which suggests an 8% growth from the 2023 figure of $371.6 billion. Operating cash flow is expected to be $30 billion to $31 billion.
The company expects to incur direct response costs related to the cyberattack in the range of $0.85 to $0.95 per share in 2024.
UNH Stock Performance
On Tuesday, UnitedHealth Group (UNH) saw a notable surge in its stock price, reaching $466.24, a substantial 4.62% increase from the previous day’s closing value of $445.63. This increase was attributed to the release of the first quarter 2024 results. At one point during the day, the shares surged by 7.7%.
Despite this uptick, UNH has experienced a year-to-date (YTD) decline of 11.45% and a 12-month decrease of 7.59%. The company boasts a substantial market capitalization of $410.84 billion.
Notably, UNH is trading below its 50 DMA of $491.10 and 200 DMA of $507.92. Its 52-week high and low stand at $554.70 and $436.38, respectively. Trading activity has averaged 5.71 million shares over the past 10 days. Short interest is 7.77 million shares as of March 28, 2024, representing 0.84% of the float, with a significant 6.57% change.
Wall Street Analysts Bullish on UNH
Fifteen analysts from Wall Street have provided a strong buy recommendation for UNH stock. Their analysis suggests an average price target of $591.29, ranging from a high of $675.00 to a low of $480.00. This average price target indicates a 26.07% increase from the current price of $469.00.
Is UnitedHealth Group (UNH) Worth Investing In?
UnitedHealth Group’s first quarter 2024 results demonstrate remarkable resilience despite the cyberattack on its Change Healthcare subsidiary. With revenue surpassing expectations and earnings reflecting strong growth, the company exhibits stability and adaptability amid adversity. Despite a net loss attributed to the cyberattack, adjusted earnings per share increased, outperforming analysts’ estimates.
UnitedHealth Group’s outlook for 2024 remains optimistic, with management anticipating improved net EPS and revenue growth. Wall Street analysts also express confidence in UNH stock, forecasting a significant increase in its price target, reflecting positive sentiment towards the company’s future performance.
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