UnitedHealth Group (UNH), the nation’s largest insurer, reported second-quarter earnings Thursday morning that easily topped Wall Street expectations. Revenue was roughly in line. A Dow Jones component, UnitedHealth stock initially rose to just below a buy point in the premarket but reversed modestly lower.
Analysts expected UnitedHealth earnings per share to climb 10% to $3.46 on revenue growth of 8% to $60.67 billion, according to Zacks Investment Research.
UnitedHealth earnings rose 15% to $3.60 a share. Revenue climbed 8% to $60.59 billion.
UnitedHealth raised 2019 guidance for adjusted EPS ranging to $14.70-$14.90 vs. prior guidance of $14.50-$14.75. Before UnitedHealth’s second-quarter beat of 14 cents, analysts expected UnitedHealth earnings per share of $14.70.
Shares of UnitedHealth Stock fell 1.7% to 262.23 just before the open on the stock market. Earlier, UnitedHealth stock topped 272, just below a 272.59 buy point, according to a MarketSmith analysis.
The Dow Jones stock rose 0.8% to 266.65 on Wednesday, closing at the highest level since Feb. 22. UnitedHealth stock lost 28% of its value from early December through mid-April, then rebounded 24%. Fears of Democrats’ sweeping Medicare for All plans have weighed on the managed care group. But UnitedHealth stock and other managed care providers such as Cigna (CI) and Anthem (ANTM) surged last week after the Trump administration dropped its drug rebate rule. The rule would have nixed payments that drugmakers pay to prescription benefit managers, such as UnitedHealth’s OptumRx.
UnitedHealth is rated No. 2 by IBD in the Medical-Managed Care group, according to IBD Stock Checkup. That’s based on a composite rating that factors in earnings, sales, margin and stock performance trends. Other managed care group leaders include Anthem stock, Cigna stock, Molina Healthcare (MOH) and Wellcare Health Plans (WCG), which is being acquired by Centene (CNC).
After a great run as a top stock in one of the market-leading industry groups, UnitedHealth stock has fallen from the top tier after Democrats took control of the House with a sweeping victory in November. Since then, Democrats have highlighted the expansion of Medicare and displacement of at least some private insurance, as a key goal.
While plans that would wipe out commercial insurance seem very unlikely to pass — even if Democrats take the White House and Senate — a less-disruptive push to allow a Medicare buy-in for those younger than 65 remains within the realm of possibility.
UnitedHealth has about 27 million commercial insurance members out of about 50 million total. The company’s managed-care division, has seen growth driven by an expansion of its Medicare Advantage. In Q2, Medicare Advantage customers rose 540,000 from a year ago.