Why UnitedHealth's Rising Medical Care Ratio Didn't Stop It From Beating Expectations in Q2
In June, UnitedHealth Group (NYSE: UNH) alerted investors that its costs were creeping up due to increasing demand for surgeries. That led to a decline in the share price heading into the company's recent earnings report. But even though the company's medical care ratio -- which measures spending on care as a share of premiums -- increased this past quarter, UnitedHealth still delivered a strong performance. Here's why the company was able to do well and why it continues to be a great buy for growth-oriented investors.
UnitedHealth reported second-quarter earnings last week, which came in much better than expected. Revenue of $92.9 billion for the period ended June 30 beat analyst forecasts of just over $91 billion. The health insurer also reported adjusted earnings per share of $6.14, which also easily beat Wall Street estimates of $5.99.
The company's medical care ratio did rise from 81.5% to 83.2%, just as investors anticipated, but that wasn't enough to derail the otherwise solid performance for the business. The revenue growth that UnitedHealth generated more than offset the rise in medical expenses and even other operating costs:
Source Fool.com
UnitedHealth Group Inc. Stock
With 33 Buy predictions and 1 Sell predictions UnitedHealth Group Inc. is one of the favorites of our community.
With a target price of 543 € there is a slightly positive potential of 14.2% for UnitedHealth Group Inc. compared to the current price of 475.5 €.
