UnitedHealth Likely to Record Higher Sales -- Earnings Preview

   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 [e-mail]

(END) Dow Jones Newswires

October 14, 2019 14:01 ET (18:01 GMT)

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