UnitedHealth Group’s 1Q16 Earnings Are Out: Here’s What the Conference Said

What Really Drove UnitedHealth Group's Performance in 1Q16?

1Q16 earnings overview

UnitedHealth Group (UNH) posted its 1Q16 earnings on April 19, 2015. The company registered diluted EPS (earnings per share) attributable to common shareholders of $1.81, which is 17% higher than the EPS reported by the company in 1Q15. In 1Q16, UnitedHealth Group also managed to beat the Wall Street analyst estimates by about $0.09.

In 1Q16, UnitedHealth Group earned $44.5 billion in revenues, which was a rise of 24.5% on a YoY (year-over-year) basis. The company’s net profit margin, however, declined by about 8.3% on a YoY basis, mainly due to changes in business mix, which resulted in an increase in pharmacy care services offered by the company.

According to the Wall Street analyst estimate, in 1Q16, Aetna (AET), Cigna (CI), and Anthem (ANTM) are expected to earn revenues of about $15.5 billion, $9.9 billion, and $19.8 billion, respectively.

Stock price movement

Since the release of its 4Q15 and fiscal 2015 results on January 19, 2016, UnitedHealth Group has witnessed a rise of around 13.7% in its share price. While the company failed to achieve the 4Q15 EPS estimate projected by analysts, UnitedHealth Group managed to report EPS of about $6.0 per year, which was in line with the guidance for 2015. In 4Q15, excluding the individual exchange business, UnitedHealth Group managed to report strong performance in all markets. This trend has continued in 1Q16 and has resulted in a healthy performance of the company’s share price.

UnitedHealth also witnessed an increase in its prior-year reserves in 1Q16, which has proved beneficial in controlling the company’s medical care ratio and subsequently boosted its EPS. This stemmed from initiatives implemented in the second half of 2015, which ensured that actual claim results were lower than expected in 1Q16.

If UnitedHealth Group’s share price continues its upward trend, it will also benefit the share prices of the SPDR S&P 500 ETF (SPY). UnitedHealth Group makes up about 0.69% of SPY’s portfolio.

Now let’s analyze the performance of UnitedHealth Group’s UnitedHealthcare segment in 1Q16.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - Behind UnitedHealthcare’s Organic Enrollments in US in 1Q16

• Part 3 - What Drove UnitedHealth Group’s Medicare & Retirement Business in 1Q16?

• Part 4 - Behind UnitedHealthcare’s Medicaid Enrollment Additions in 1Q16