Are UnitedHealth Earnings Enough for Investors?

Health and Healthcare

Published: October 15, 2015 10:25 am

UnitedHealth Group Inc. (NYSE: UNH) released its third-quarter financial results before the markets opened on Thursday. The health insurance giant reported $1.65 in earnings per share (EPS) on $41.49 in revenue. That compared to consensus estimates from Thomson Reuters of $1.64 in EPS on revenue of $40.17 billion. In the same period of the previous year, it posted EPS of $1.63 and $32.76 billion in revenue.

The company grew to serve 1.7 million more people domestically over the past year, Including 290,000 people added in the just the third quarter alone.

UnitedHealth has moderated its repurchase activity in connection with the Catamaran acquisition. In this quarter, the company repurchased $177 million in stock, bringing year-to-date repurchases to over 10 million shares for $1.1 billion.

For the 2015 full year, UnitedHealth continues to project net earnings in a range of $6.25 to $6.35 per share, and cash flows from operations of $8.4 billion to $8.6 billion. There are consensus estimates for $6.33 in EPS on $154.64 billion in revenue.

In terms of its segments, UnitedHealth reported:

Premiums up 9.8% year over year with revenues of $31.8 billion.
Products up roughly 500% year over year with revenues of $6.48 billion.
Services up 19.7% year over year with revenues of $3.04 billion.
Investment and other income down 1.2% year over year with revenues of $170 million.

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Stephen J. Hemsley, CEO of UnitedHealth, commented on earnings:

Our 2015 results are reflecting balanced growth across a diversity of businesses and product categories. We believe this growth will continue because we are serving people more effectively, simplifying their health care experiences, and offering practical innovations that help deliver more value to the consumer and the health care system as a whole.

On the books the company had $9.93 billion in cash and short-term investments, compared to $9.24 billion at the end of December 2014.

Shares of UnitedHealth were down 3.7% at $117.55 Thursday morning, with a consensus analyst price target of $147.09 and a 52-week trading range of $84.10 to $126.21.

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