Skip to Content
Morningstar

UnitedHealth Earnings: Despite Higher Medical Utilization Trends, 2023 Outlook Mildly Increases

At first glance, we do not intend to change our $462 fair value estimate for UnitedHealth stock, and its shares appear fairly valued

In this photo illustration, the UnitedHealthcare logo seen displayed on a smartphone screen and in the background.
Securities In This Article
UnitedHealth Group Inc
(UNH)

UnitedHealth Group Stock at a Glance

UnitedHealth Group Earnings Update

UnitedHealth Group UNH turned in a strong second quarter, and management slightly increased its 2023 outlook despite increasing medical utilization, especially among seniors. At first glance, we do not intend to change our $462 fair value estimate, and shares appear fairly valued. Our narrow economic moat rating also continues to recognize the long-term regulatory risks that the firm and its managed-care peers face.

After spooking the market with comments on increasing medical utilization at a recent investor conference, the company reported strong second-quarter results on both the top and bottom lines, exceeding market expectations. Specifically, the firm turned in 16% revenue growth, 13% operating income growth, and 10% adjusted EPS growth, including 13% operating profit growth from both the medical insurance arm and nonmedical insurance (Optum) franchises.

In the medical insurance business, medical membership grew 3% year over year, with most of its end markets flat sequentially despite expected pressures from resumed Medicaid redetermination activities. Additionally, top-line growth at Optum looked robust at 25% year over year, led by the Optum Health caregiving business, which turned in 36% revenue growth on just a low-single-digit increase in consumers served, as more patients were served under value-based arrangements and more services were rendered per patient. Optum Insight and Optum Rx both delivered especially strong quarters as well on the top line, but margins declined overall in the Optum business on internal investment activities.

With another good quarter in the books, management mildly raised the bottom end of its 2023 guidance range by $0.20 to $24.70-$25.00 (11%-13% growth), now a couple of cents above our 2023 assumption. We may boost our near-term view slightly on these trends, but would not expect our fair value estimate to change materially, since it is driven primarily by much longer-term expectations.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

More in Stocks

About the Author

Julie Utterback

Senior Equity Analyst
More from Author

Julie Utterback is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. Within the healthcare industry, she covers medical technology and service companies. She is also the chairperson of the equity research team’s capital allocation methodology.

Utterback joined Morningstar in 2005 as an equity analyst in the healthcare industry. At that time, she covered medical technology companies, including orthopedic device, medical equipment, and cardiac device firms. In 2010, she joined Morningstar's credit research team, initiating coverage of the entire healthcare industry and generally helping the organization expand and maintain its credit coverage across many industries. She held that senior credit analyst role until April 2019, when she returned to the equity team to cover medical technology and service companies.

Prior to joining Morningstar, Utterback was an equity analyst at State Farm Insurance for several years. She holds a bachelor's degree in finance from the University of Illinois Urbana-Champaign. She also holds the Chartered Financial Analyst® designation.

Sponsor Center