Latest news with #OptumHealth
Globe and Mail
a day ago
- Business
- Globe and Mail
Can Optum Support UnitedHealth's Profit Amid Industry Headwinds?
As UnitedHealth Group UNH is set to unveil second-quarter earnings on July 29, all eyes are on its dynamic platform, Optum. With a quarter filled with regulatory challenges and margin pressures in the health insurance space, Optum's performance can be a stabilizing force that assures investors. Optum's diverse business model, which covers everything from pharmacy services to data analytics and value-based care, gives UNH a solid advantage. In the second-quarter 2025, even as medical costs are expected to have surged due to a rise in outpatient visits and elective procedures, Optum's growth is likely to have provided a buffer. In 2024, Optum's revenues grew 12%, followed by 4.6% growth in 1Q 2025. In 2Q 2025, the Zacks Consensus Estimate for Optum's revenues indicates a 7.3% year-over-year increase from the year-ago level of $62.9 billion. OptumHealth is ramping up its value-based care model, which encourages better health outcomes while keeping costs down. This approach helps to cushion the impact of rising claims in the sector. OptumInsight is making waves with its tech and data-driven services, boosting operational efficiencies not only for external clients but also within UNH itself. OptumRx has established itself as a stable player by leveraging its scale in pharmacy benefit services. However, the current administration's scrutiny of PBM pricing practices poses a significant operational risk. If this quarter shows either stable or improved margins from Optum, it could boost investor confidence, suggesting that UnitedHealth's integrated strategy still has long-term potential, even in the unpredictable world of healthcare. How Are Competitors Faring? Some of UNH's major competitors in the healthcare service provider space are Elevance Health Inc ELV and The Cigna Group CI. Elevance is doubling down on its Carelon services brand, focusing on analytics, digital health and pharmacy. The segment's operating revenues rallied 36.1% year over year in the second quarter of 2025. Elevance's operating revenues rose 14.3% year over year in the same quarter. Cigna's health services division, Evernorth, offers a range of services, including pharmacy benefits, behavioral health support and data analytics. The unit's adjusted revenues climbed 16% year over year in the first quarter of 2025. Cigna is set to report on its second-quarter results on July 31. UnitedHealth's Price Performance, Valuation & Estimates Shares of UNH have declined 44.5% in the year-to-date period compared with the industry 's fall of 36.7%. Image Source: Zacks Investment Research From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 12.2, above the industry average of 11.2. UNH carries a Value Score of A. Image Source: Zacks Investment Research The Zacks Consensus Estimate for UnitedHealth's 2025 earnings is pegged at $21.15 per share, implying a 23.5% drop from the year-ago period's actual. The stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include Stock #1: A Disruptive Force with Notable Growth and Resilience Stock #2: Bullish Signs Signaling to Buy the Dip Stock #3: One of the Most Compelling Investments in the Market Stock #4: Leader In a Red-Hot Industry Poised for Growth Stock #5: Modern Omni-Channel Platform Coiled to Spring Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%. Download Atomic Opportunity: Nuclear Energy's Comeback free today. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Cigna Group (CI): Free Stock Analysis Report Elevance Health, Inc. (ELV): Free Stock Analysis Report
CNBC
a day ago
- Business
- CNBC
UnitedHealth aims to reassure investors as profits plunge, DOJ investigates its Medicare business
UnitedHealth Group Chairman and CEO Stephen Hemsley will face the first real test Tuesday of his ability to regain investor confidence as the largest private U.S. insurer reports earnings. The Dow component has seen its share price cut nearly in half since mid-May, with the stock on pace for its worst year in more than a decade, after earnings in its flagship Medicare program and Optum Health physician practices plummeted. That led to the abrupt resignation of former CEO Andrew Witty, forcing the company to reinstate ex-CEO Hemsley to replace him and suspend earnings guidance. On top of that, the company is facing criminal and civil Department of Justice investigations into its Medicare billing practices. As UnitedHealth faces challenges on multiple fronts, it sits in a "perfect storm," said Mizuho Securities analyst Ann Hynes. Now, investors want to know how Hemsley plans to steer the company out of the whirlwind, after assuring them last June that "we're humbly determined to earn back your trust and your confidence." Here are three key things investors will be looking for from the company's earnings report. More so than the second-quarter numbers, analysts are focused on UnitedHealth's outlook for the full year. Hemsley told investors the company would provide an update on 2025 earnings guidance, after it suspended its forecast in May. Analysts expect UnitedHealth to post adjusted full-year earnings of $21.26 per share, according to consensus estimates from LSEG. Estimates range from a low of $18 per share to a peak of $26.44 a share. "Anything below $18 — that would be viewed as a negative by the street," Hynes said RBC Capital Markets analyst Ben Hendrix has set his estimate above consensus at $23.36, but said Wall Street remains bearish on UnitedHealth. "While we base our more optimistic outlook on management's assertion that Medicare Advantage remains profitable with the 3% low-end of target MA margin in sight for 2026, clients we've spoken to have expressed concern over continued margin compression in OptumHealth and accelerating (medical cost) trend in core Medicare Advantage," he wrote in a note earlier this month. Analysts are also focused on how the company plans to stabilize its physician practice unit, Optum Health. For years, it helped UnitedHealth outperform its peers in its flagship Medicare Advantage program, by leveraging its 90,000 employed or affiliated doctors to treat patients on UnitedHealth's own plans. "Investors with duration were investing in United really for the power of … Optum Health, the power of United steering their own Medicare Advantage members, extracting considerable margin that they hadn't been able to before," said Baird analyst Michael Ha. But in the first quarter this year, Optum Health saw a sharp decline in profits. Analysts said the plunge was due in part to a Biden-era change in Medicare reimbursement standards known as V28, which is making it harder for insurers and doctors to bill for extra services. Mizuho's Hynes said prior billing coding rules left a lot more room for plans to add billing codes related to chronic conditions, such as overall heart conditions, which would provide a higher risk score and reimbursement rate. Under the new V28 rule the billing codes are more specific, closing loopholes that could boost reimbursement. "V28 is very black and white, so you don't have that kind of ability to add codes, and a lot of codes are removed," she said, adding that has now "led to a structural shift in margins for Optum Health." But Ha noted the V28 changes began in 2024, at a time when seniors started utilizing more care. Many of UnitedHealth's Medicare Advantage competitors made adjustments over the last year to address the shift. The sudden collapse of Optum Health margins in the first quarter appears to have caught UnitedHealth off guard. "I think it's an example of misexecution. They knew the headwind heading into the year and even well before then, but for one reason or another couldn't find the offset," Ha said. "We're still confident that Optum Health and United can recover and rebuild unit economics, but we think over the next one to two years, it may potentially worsen." The company got out ahead of the earnings report on Thursday, acknowledging in an SEC filing that its Medicare program billing practices face criminal and civil probes by the Department of Justice. UnitedHealth said the company is cooperating the with the investigations, first reported by the Wall Street Journal. It also noted that in March, a court-appointed special master ruled in the company's favor in a case involving similar allegations brought by the DOJ during the first Trump administration. Hynes believes investor concern over the DOJ probes has been overblown. "The stock is trading like the government's going to kick them out of Medicare and Medicaid, and the likelihood of that is zero, in my view," she said. "It will probably end up with them writing a check and doing a Corporate Integrity Agreement … that's what has happened in the past." But the shooting death of UnitedHealth executive Brian Thompson last December, which prosecutors allege was carried out by a gunman who was motived by insurance denials, unleashed a groundswell of public criticism of health insurers' practices. Former whistleblower Wendell Potter, who has criticized industry practices after a career at Cigna, said the pressure on large insurers like UnitedHealth likely will not cease. Regulatory scrutiny in Congress has increased on both sides of the aisle, as Washington grapples with high health and drug costs in Medicare, Medicaid and other government health programs. "A lot of the members of Congress who are doctors or Republicans, some are pharmacists, and they see firsthand the heavy hand of these companies," said Potter, president of the Center for Health and Democracy. "And so you're seeing interest by Republicans, and I've not seen that before." In June, UnitedHealth announced that it had hired third party auditors to conduct a review of the company's practices in health insurance and pharmacy benefits services, in an effort "to provide our stakeholders transparency and confidence" in the company's business practices. The company told CNBC it will not have many details to offer about that audit during the second-quarter earnings call. It does not expect the review to be completed until the end of the third quarter of this year.
Yahoo
2 days ago
- Business
- Yahoo
UnitedHealth Group's (UNH) Healthcare Dominance: A Key Player in the Dogs of the Dow
UnitedHealth Group Incorporated (NYSE:UNH) is included among the 11 Dogs of the Dow Dividend Stocks to Buy Now. A senior healthcare professional giving advice to a patient in a clinic. The stock has dropped over 44% so far this year after reporting weaker-than-expected earnings in the first quarter. The company first reduced its full-year outlook and later chose to withdraw it entirely. Even with the underwhelming Q1 performance, UnitedHealth Group Incorporated (NYSE:UNH) still posted a 9.8% year-over-year increase in revenue, reaching $109.6 billion. It earned a profit of around $6.3 billion during the quarter and maintained a solid financial position, holding close to $34.3 billion in cash and cash equivalents, along with a debt level that remains manageable. The company has added 780,000 new members so far this year. Meanwhile, Optum Health still expects to provide value-based care to an additional 650,000 patients in 2025. In addition, UnitedHealth Group Incorporated (NYSE:UNH) generated $5.5 billion in operating cash flow during the quarter and returned $5 billion to investors through dividends and share repurchases. The company has been rewarding shareholders with growing dividends since 2011 and currently offers a quarterly dividend of $2.21 per share. The stock supports a dividend yield of 3.15%, as of July 26. While we acknowledge the potential of UNH as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
Top Analyst Calls UnitedHealth a 'Top Pick' Ahead of Earnings
July 22 - UnitedHealth Group (NYSE:UNH) has tumbled roughly 42% year?to?date, driven by rising Medicare Advantage costs, a surprise CEO exit, withdrawn guidance and a Department of Justice probe. However, ahead of its July 29 Q2 earnings, Bernstein analyst Lance Wilkes tapped UNH as a 'Top Pick,' saying the pullback creates an attractive entry point. He noted the stock trades at about 13.5 times forward earnings, below its ten?year average. Warning! GuruFocus has detected 4 Warning Sign with UNH. Wilkes cut his 2025 EPS estimate by 10% to reflect reserve strengthening and cost pressures in individual and Medicaid segments, plus a cleanup of OptumHealth risk contracts. Yet he projects earnings per share could double by 2029, implying a 19% compound annual growth rate. The analyst expects cost normalization to begin in Medicaid in Q3 and in Medicare Advantage in early 2026 as utilization patterns stabilize. He also highlighted a hardening pricing environment for government managed?care plans as a margin tailwind. Is UNH Stock a Buy? Based on the one year price targets offered by 24 analysts, the average target price for UnitedHealth Group Inc is $375.46 with a high estimate of $677.00 and a low estimate of $270.00. The average target implies a upside of +33.08% from the current price of $282.14. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
05-07-2025
- Business
- Business Insider
These 3 Catalysts Could Push UnitedHealth Stock (UNH) Higher
UnitedHealth Group (UNH), one of the largest health insurance and services companies in the U.S., has had a tough year so far. But there are three key catalysts that could help the stock bounce back in the next year or two. These include better-than-expected Medicare Advantage payments, a leadership change at its Optum Health division, and a more stable political environment around healthcare policy. Each of these developments could help UnitedHealth recover from recent setbacks and regain investor confidence. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. The first big catalyst is the improved Medicare Advantage (MA) payment outlook. Earlier this year, U.S. regulators announced a 5.06% rate increase for MA plans in 2026, which was much higher than the 2.23% previously expected. This is important because UnitedHealth relies heavily on MA plans for revenue, through both its insurance business and its Optum services. As a result, higher rates should ease pressure on earnings, especially after a tough 2025 that has been marked by increased medical costs and regulatory investigations. Simply put, more funding means more breathing room for UnitedHealth's bottom line. The second catalyst is a leadership shakeup at Optum Health. After struggling with lower patient volumes and billing issues, UnitedHealth named Patrick Conway, an experienced healthcare executive, as CEO of Optum Health. The hope is that new leadership will help stabilize the business and boost performance. Finally, the third positive factor is reduced regulatory risk. A proposed 25% funding cut to Medicaid and ACA programs was blocked in the U.S. Senate, which helps remove uncertainty for companies like UnitedHealth. When you put it all together—better funding, stronger leadership, and fewer policy threats—UnitedHealth looks better positioned for a recovery. What Is the Future of UNH Stock? Turning to Wall Street, analysts seem to agree that the stock can recover since they have a Moderate Buy consensus rating on UNH stock based on 18 Buys, seven Holds, and one Sell assigned in the past three months. Furthermore, the average UNH price target of $361.91 per share implies 17.2% upside potential.
