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What's in Store for UnitedHealth Group's (UNH) Q4 Earnings?

UnitedHealth Group Inc. UNH is scheduled to report fourth-quarter 2021 results on Jan 19, before the opening bell.

Q4 Estimates

The Zacks Consensus Estimate for earnings per share is pegged at $4.30, indicating a rise of 70.6% from the year-ago quarter's reported figure. The consensus mark for revenues stands at $73 billion, suggesting growth of 11.7% from the prior-year quarter's reported number.

Key Factors to Note

Revenues from UnitedHealthcare, UNH’s largest segment that sells insurance, are likely to have risen on higher membership in community and senior programs. UNH is likely to have added members to Medicare Advantage (MA) plans, Medicaid. Solid insurance sales of dental and vision plans might have aided premium growth. The consensus mark for revenues from the segment indicates an upside of 11.1% from the prior-year quarter’s reported figure.

In another segment named Optum, top-line growth is expected to have been driven by higher contribution from its sub-segments OptumHealth and Optum Insight. In its OptumHealth subsegment, revenues and earnings are likely to have gained from higher a number of people being catered to in value-based care arrangements and the growing strength of affiliated physicians. The consensus estimate for revenues from Optum indicates an upside of 12.2% from the prior-year quarter’s reported figure.

Optum Insight is likely to have witnessed better revenues and earnings owing to growth in services and technology offerings, and improved productivity.

New business wins, contract extensions and pipeline growth in comprehensive managed services are expected to have boosted the top line. The Zacks Consensus Estimate for Optum Insight’s revenues hints at an upside of 11.5% from the year-ago quarter’s reported number.

Operating cost ratio, which measures the expense incurred in proportion to revenues, is likely to have decreased following the cancellation of the health insurance tax and continued operating efficiency gains. This, in turn, is likely to have been partly offset by business mix, and heavy investment in growth and innovation.

UNH’s bottom-line result is expected to reflect the net unfavorable impact of COVID-19 testing and treatment costs. UnitedHealth is likely to have faced an elevated expense level due to rise in medical costs and operating costs.

Earnings Surprise History

UnitedHealth boasts a stellar earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 8.66%.
This is depicted in the chart below:

What Our Quantitative Model Predicts

The proven Zacks model does not conclusively predict an earnings beat for UnitedHealth this time around. The combination of a positive  Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: UnitedHealth has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: UnitedHealth carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks worth considering from the medical space with the perfect mix of elements to surpass estimates in their upcoming quarterly releases are as follows:

Teladoc Health, Inc. TDOC has an Earnings ESP of +5.97% and is Zacks #3 Ranked, currently.

HCA Healthcare, Inc. HCA is currently a #3 Ranked player and has an Earnings ESP of +1.21%.

Tenet Healthcare Corporation THC has an Earnings ESP of +0.96% and a Zacks Rank of 3, currently.

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