Industry analysts have rosy first-quarter expectations for a majority of the largest U.S. managed care companies.
Revenues for all of the top nine publicly traded U.S. managed care insurers are expected to be up year over year, while five companies should see increases in EPS, according to an S&P Global Market Intelligence examination of sell-side analyst forecasts.
UnitedHealth earnings outlook in line with expectations
UnitedHealth Group Inc. reported first-quarter results ahead of its health insurer peers, setting the tone for the group. The company posted net earnings attributable to shareholders of $5.03 billion, or $5.27 per share, up from $4.86 billion, or $5.08 per share, a year ago. UnitedHealth did see its net earnings increase year over year, but the EPS figure came up a bit short of the $5.36 consensus estimate.
UnitedHealth raised its outlook for full-year 2022 net earnings to $20.30 to $20.80 per share and adjusted earnings to $21.20 to $21.70 per share. Jefferies analyst David Windley wrote in a note that the guidance hike was consistent with his expectations.
COVID-19 incidence varied dramatically in the first quarter, UnitedHealth CFO John Rex said during an April 14 earnings call. At one point in January, 40,000 policyholders were in the hospital for COVID-19-related reasons. By March, that figure had plummeted to just 2,000 policyholders.
Rex also said that deferred care during the worst of the pandemic does not seem to have led to higher levels of acuity that had been previously anticipated.
Sunny revenue picture
Revenues are projected to be up across the board on a year-over-year basis, and most health insurers are forecast to see gains sequentially as well. UnitedHealth's revenues surged by double digits year over year in the first quarter, rising to $80.15 billion from $70.20 billion.
Sell-side analysts seem to have high longer-term expectations for HealthEquity Inc. as Guggenheim initiated coverage at "buy" on April 7 and Wells Fargo started the company at "overweight" less than a week later. HealthEquity has outpaced the rest of its peers in bringing in new health savings accounts since 2011, Guggenheim's Sandy Draper noted.
HealthEquity's EPS is expected to fall year over year but rise sequentially. The company is, however, projected to see year-over-year revenue gains.