Will UnitedHealth Group (UNH) Beat Q3 Earnings Estimates?

UnitedHealth Group Incorporated UNH is slated to release third-quarter 2022 earnings on Oct 14, before the opening bell.

Q3 Estimates

The Zacks Consensus Estimate for UNH's third-quarter earnings per share (EPS) is pegged at $5.45, which indicates an improvement of 20.6% from the prior-year quarter. Meanwhile, our estimate suggests EPS of $5.49 in the to-be-reported quarter.

The consensus mark for revenues stands at $80.7 billion, suggesting 11.6% growth from the year-ago quarter. Our estimate indicates total revenues of $80.5 billion for the third quarter.

Earnings Surprise History

UnitedHealth Group boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 3.66%. This is depicted in the chart below:

UnitedHealth Group Incorporated Price and EPS Surprise

UnitedHealth Group Incorporated Price and EPS Surprise

UnitedHealth Group Incorporated price-eps-surprise | UnitedHealth Group Incorporated Quote

What Our Quantitative Model Unveils

Our proven model predicts an earnings beat for UnitedHealth Group 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.

Earnings ESP: UnitedHealth Group has an Earnings ESP of +0.35% because the Most Accurate Estimate of $5.47 is pegged higher than the Zacks Consensus Estimate of $5.45. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

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

Factors to Note

UnitedHealth Group’s revenues are likely to have benefited on the back of higher premiums in the third quarter. Premiums are expected to have witnessed a rise, thanks to membership growth on well-devised Medicare and Medicaid plans that UNH distributes through the UnitedHealthcare business. The Zacks Consensus Estimate for total premiums of UnitedHealth Group is pegged at $63.9 billion, indicating 12.2% year-over-year growth from the prior-year quarter’s reported figure. Our estimate for total premiums is $64 billion.

The consensus mark for two revenue components, products and services, is pegged at $9.6 billion and $6.8 billion, respectively. Both the figures indicate year-over-year improvements of around 11%.

Continued solid performances by UNH’s two businesses — UnitedHealthcare and Optum — are likely to have contributed to the overall quarterly performance. An increase in the number of individuals served by community-based and senior offerings and, domestic commercial benefit offerings coupled with contract wins might have contributed to the UnitedHealthcare segment’s third-quarter performance.

The Zacks Consensus Estimate for revenues of the UnitedHealthcare segment is pegged at $62.2 billion (indicating 11.3% growth year over year), while our estimate indicates the segment’s revenues to be $62.3 billion.

Coming to the Optum business, its performance is likely to have benefited from an increase in patients catered to via value-based care arrangements, solid contributions from Optum's ambulatory surgery centers, continued expansion of pharmacy care services and solid information technology and data analytics offerings suite.

The Zacks Consensus Estimate for third-quarter operating income of the Optum unit stands at $3.6 billion, which indicates a rise of 18.6% from the prior-year quarter’s reported figure. Meanwhile, our estimate for Optum’s third-quarter operating income matches the consensus mark.

The bottom line of UnitedHealth Group is likely to have suffered from escalating expenses resulting from continuous investments to boost capabilities. This might have dampened its margins in the to-be-reported quarter.

Other Stocks to Consider

Here are some other companies from the Medical space that you may want to consider, as our model shows that they too have the right combination of elements to post an earnings beat this time around:

Humana Inc. HUM has an Earnings ESP of +0.76% and a Zacks Rank #2, currently. The Zacks Consensus Estimate for Humana’s third-quarter 2022 earnings is pegged at $6.24 per share, which indicates an improvement of 29.2% from the prior-year reported number.

HUM beat earnings estimates in each of the trailing four quarters.

Chimerix, Inc. CMRX has an Earnings ESP of +33.81% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for Chimerix’s third-quarter 2022 earnings stands at $2.10 per share. The year-ago reported figure was a loss of 21 cents per share.

The consensus mark for CMRX’s third-quarter earnings has moved 1.4% north over the past 30 days.

Genmab A/S GMAB has an Earnings ESP of +18.79% and a Zacks Rank of 2. The Zacks Consensus Estimate for Genmab’s third-quarter 2022 earnings is pegged at 24 cents per share, which indicates an improvement of 14.3% from the prior-year reported number.

GMAB beat earnings estimates in each of the trailing four quarters.

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