UnitedHealth Q2 results: ‘they’re doing such a good job across the board’

UnitedHealth Group Inc (NYSE: UNH) is up 5.0% on Friday after the managed care and insurance firm reported better-than-expected results for its fiscal second quarter and raised its guidance for the full year.

Notable figures in UnitedHealth Q2 results

Net income went up 19% year-over-year to $5.07 billion
EPS of $5.34 was much better than $4.46 in Q2 of the previous year
Adjusted for one-time items, per-share earnings printed at $5.57
Revenue jumped 12.6% to $80.33 billion, as per the earnings press release
FactSet consensus was for $5.21 of adjusted EPS on $79.68 billion in revenue
Total operating costs climbed 12% in the recent financial quarter

Other notable figures in UnitedHealth Q2 results include a 13.6% and 18% growth in premiums (ahead of estimates) and Optum revenue, respectively. The stock price is up more than 15% since its low on June 17^th.

UNH is worth paying the higher multiple

For the full financial year, UnitedHealth now forecasts its per-share earnings (adjusted) to fall in the range of $21.40 to $21.90. This compares to analysts at $21.69. Commenting on the earnings report on CNBC’s “Squawk Box”, Hightower’s Stephanie Link said:

They’re doing such a good job across the board. They’re the dominant payer of scale in commercial, Medicare, Medicaid, Optum, PBMs, healthcare information technology and services. Not cheap at 24 times, but for a company that consistently delivers, I’ll pay that kind of multiple.

Link expects “Optum” to continue its double-digit growth moving forward. Wall Street currently rates UNH at “buy” and see another 9.0% upside from here on average.

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