UnitedHealth hits seven-month high after Q2 beat

Update 10.41 AM EST: Adds latest share price move and other notable gainers

UnitedHealth (NYSE:UNH) shares reached the highest level since December on Tuesday, marking its biggest intraday gain for the year, after the managed care giant beat Wall Street forecasts with its Q2 2024 results.

With UnitedHealth (UNH) being the industry bellwether in the earnings season, its managed care peers are also on the rise. Notable gainers include Humana (HUM), Cigna (CI), CVS Health (CVS), Centene (CNC), Clover Health (CLOV), and Alignment Healthcare (ALHC).

However, Minnetonka, Minnesota-based UnitedHealth (UNH) indicated a rise in medical costs during the quarter as it continues to grapple with the aftermath of the cyberattack on its Change Healthcare division in February.

The company raised its full-year forecast attributed to cyberattack impact to $1.90 – $2.05 from its previous estimate of $1.15 – $1.35 per share, citing business disruption, an increase in direct response costs, and costs related to financial assistance and consumer notification.

UnitedHealth (UNH) said it has provided $9B in advance funding and interest-free loans to support care providers as it restored most Change Healthcare services affected by the attack.

However, UNH kept its adj. full-year earnings outlook at $27.50–$28.00 (compared to $27.69 per share in the consensus) even as it raised the cyberattack-related business disruption impact by $0.30 to $0.60 – $0.70 per share.

Its medical care ratio, a key managed care metric indicating the share of premiums spent on healthcare costs, rose to 85.1% in Q2 from 83.2% in the prior year and 84.3% in the preceding quarter, mainly due to support given to care providers affected by the attack.

However, UNH’s topline expanded ~7% YoY to $98.9B, meeting Street expectations as its insurance business, UnitedHealthcare, and its health services arm, Optum, added $73.9B and $62.9B in revenue, respectively, with ~5% YoY and ~12% YoY growth.

Meanwhile, its adjusted quarterly earnings grew ~11% YoY to $6.80 per share, despite a $0.28 headwind attributed to the Change Healthcare disruption.