UnitedHealth Group Inc (NYSE: UNH) stock slightly fell over 0.6% on 20th April, 2020 (as of 12:15 pm GMT-4; Source: Google finance) but delivered 34% returns in this month (Source: Finviz.com) driven by better than expected results for the first quarter of FY 20. The company has reaffirmed its financial targets for the year, but cautioned it was uncertain of the impact of elective procedures being postponed by Americans during the COVID-19 pandemic. For the first quarter, the company has reported medical loss ratio, which is a measure of the percentage of premiums paid out for medical services, of 81.0%, which represents a decline of 1% from a year earlier, benefiting from the return of the industry-wide health insurance fee. The ratio beat analysts’ estimates of 81.57%. However, on the back of current environment the ratio could be elevated in the second half of the year, the company has warned, adding that it could be its lowest in the second quarter. A lower ratio is generally better for the health insurers. Further, the company has also acknowledged that its employer-sponsored health insurance business could come under pressure from the increase of unemployment levels in the country, while its Medicaid and individual business lines could benefit.
UNH in the first quarter of FY 20 has reported the adjusted earnings per share of $3.72, beating the analysts’ estimates for the adjusted earnings per share of $3.63, according to Refinitiv IBES data. This is driven by 24.6% year-over-year jump in Optum revenue. The company had reported the adjusted revenue growth of 6.8 percent to $64.4 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $64.32 billion. The company has ended the quarter with an intentionally higher excess cash balance and a higher than normal debt-to-capital ratio.
The company continues to expect adjusted net earnings to be in the range of $16.25 to $16.55 per share for the year, the mid-point of which is above analysts’ estimate of $16.22, according to Refinitiv IBES data.
Meanwhile, the company has last week, moved to offer about $2 billion in liquidity to the health system, accelerating payments to care providers whose clinical operations have been impacted. The company has been partnering with other companies and academic institutions for the development and validation protocols and processes to more rapidly and frequently test healthcare professionals on the frontline. The company’s newly developed COVID-19 symptom checker offers the people with recommendations on how to proceed, based on the results.