UnitedHealth sends beaten-down peers higher after Q1 results

Following a YTD slump, leading managed care players in the U.S. traded higher on Tuesday after industry bellwether UnitedHealth (NYSE:UNH) reported better-than-expected Q1 2024 results, shrugging off concerns related to rising medical expenses.

The Minnetonka, Minnesota-based healthcare giant, reeling from a recent cyberattack on its Change Healthcare unit, reported $99.8B in revenue with ~9% YoY growth.

However, its bottom line swung to a $1.53 net loss per share, mainly due to the cyberattack and approximately $7B charge related to the previously disclosed sale of its Brazil operations.

Meanwhile, its medical care ratio, the portion of premiums spent on healthcare costs, reached 84.3%, an improvement from 85% in Q4 2023, a period characterized by a post-COVID spike in healthcare utilization among Medicare Advantage recipients.

Other managed care providers focused on the MA market, including Humana (HUM) and Alignment Healthcare (ALHC), rose after the results following a YTD selloff. CVS Health (CVS), the owner of Aetna Health Insurance, and Medicaid-dependent Elevance Health (ELV) are also trading higher.

As for the outlook, UNH expects its net earnings to reach $17.60–$18.20 per share in 2024, down from its November forecast of $26.20 to $26.70. However, its adjusted earnings per share, excluding the impact of the cyberattack and the Brazil sale, remained unchanged at $27.50–$28.00, in line with consensus.