UnitedHealth Likely to Record Higher Sales -- Earnings Preview
October 14 2019 - 2:16PM
Dow Jones News
By Dave Sebastian
UnitedHealth Group Inc. (UNH) is scheduled to report results for
its fiscal third-quarter premarket on Tuesday. Here's what you need
to know.
EARNINGS FORECAST: Analysts polled by FactSet expect profit of
$3.55 a share. They expect UnitedHealth to report adjusted earnings
of $3.75 a share. In July, UnitedHealth raised its per-share
earnings targets to between $13.95 and $14.15 from between $13.80
and $14.05. The company will hold its investor call at 8:45
a.m.
REVENUE FORECAST: Analysts polled by FactSet expect sales of
$59.76 billion, compared with $56.56 billion in the year-ago
period.
MEDICAL COST RATIO: The ratio, which is a comparison of an
insurer's costs to its revenues, is expected to be 82.4% during the
quarter, according to analysts polled by FactSet. A higher ratio
indicates the company is putting less toward non-medical costs such
as profits and reinvestment.
WHAT TO WATCH:
MEDICARE: The company earlier this month introduced its 2020
Medicare Advantage and prescription drug plans, and said almost 2
million people would pay zero dollars on Medicare Advantage
premiums. Managed-care stocks tanked when Sen. Bernie Sanders (I.,
Vt.) in April introduced the Medicare for All Act. Sen. Elizabeth
Warren (D, Mass.), a proponent of the bill, is among the
frontrunners for the Democratic presidential nomination, according
to the latest WSJ/NBC News Poll. "There's been the medical overhang
of the Medicare primary debate," Evercore analyst Michael Newshel
told WSJ.
HEALTH INSURER FEE: Health insurance companies in 2020 face a
tax bill of more than $15.5 billion after the fee was suspended for
2019. "It's the biggest headwind for next year," Mr. Newshel said
of the fee's return.
COMPETITION: The company also faces more competition as Anthem
Inc. (ANTM) strives to regain market share in the commercial group
risk market, which Jefferies analyst David Windley, in a note
earlier this month, said is gaining traction. Mr. Windley
downgraded UnitedHealth's rating to "hold" from "buy," and lowered
its price target to $235 from $300.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
October 14, 2019 14:01 ET (18:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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