UPDATED at 3 p.m. ET on Oct. 15
UnitedHealth Group's stock trended down Tuesday following the release of its earnings report, where it posted a beat on both earnings and revenue but disappointed Wall Street on its overall outlook for the year.
Shares in the company were down by nearly 8% as of 3 p.m. ET on Tuesday.
Activity in Medicare Advantage and Medicaid were highlighted on the company's earnings call Tuesday morning, where executives noted that headwinds that have been pressuring the industry for the past year are expected to continue to be felt into 2025.
Medicare's annual enrollment period also began Tuesday, and CEO Andrew Witty said the company's response to utilization and other cost pressures in late 2023 set them up well for the coming season.
"As we come into this cycle, I think, what we're seeing is the benefits of some very thoughtful, calm, not over reactive planning last year," he said. "I think that sets us up in a good place in terms of how we enter this year. We'll see how this cycle goes."
Tim Noel, CEO of UnitedHealthcare Medicare and Retirement, told investors on the call that the company's "long-term planning view" enables the company to have a "rational" response to pricing pressures and other challenges in MA. And given payment cuts, tighter cut points for the star ratings and other regulatory changes, "that's never more important than it is today."
Executives also said the Medicaid unwinding process also poses a headwind in the later part of the year.
Despite these challenges, UnitedHealthcare CEO Brian Thompson said on the call that the commercial book, which was called out in the earnings report as a point of growth, hasn't felt the same pressures.
UnitedHealth Group kicked off another round of earnings calls for major health insurance companies Tuesday morning, when it reported $6.06 billion in profit for the third quarter of 2024.
That's up slightly from the $5.8 billion the company posted in the third quarter of 2023. However, UnitedHealth has brought in $8.9 billion in profit through the first three quarters of the year, down by close to half from the $16.9 billion reported through the first nine months of 2023.
The profit number surpassed Wall Street analysts' expectations, according to Zacks Investment Research.
UnitedHealth also beat the Street on revenue, according to Zacks, bringing in $100.8 billion in the third quarter. By comparison, UHG brought in $92.4 billion in revenue in the prior-year quarter.
Total revenues through the first three quarters of the year were $299.5 billion, up from $277.2 billion through the first nine months of 2023.
“Our continued growth, which positions us well for the coming years, is rooted in the innovative products and responsive service of our people that are embraced each day across the full range of health care participants,” said Andrew Witty, CEO of UnitedHealth Group.
UnitedHealth Group expects between $27.50 and $27.75 in earnings per share, according to the report, which is within the guidance range it established in late 2023. That is in spite of the company eating 75 cents per share in business disruption costs related to the cyberattack on Change Healthcare, which dragged the company's finances at the beginning of the year.
Revenues at UnitedHealthcare were $74.9 billion, up from $69.9 billion in the prior-year quarter. The company said this was due in large part to membership growth, calling out in particular that its domestic commercial offerings have added 2.4 million people for a total of 29.7 million.
It also boasts 9.4 million Medicare Advantage (MA) members, according to the report, and, while the company did sue the Centers for Medicare & Medicaid Services over the MA star ratings, it said overall performance was in line with its expectations.
Total medical membership was 50.7 million as of the third quarter of 2024, UnitedHealth said.
At Optum, meanwhile, revenues were $63.9 billion, up from $56.7 billion in the third quarter of 2023. UHG said that its Optum Health and Optum Rx units led the charge on growth in the third quarter.
Revenues at Optum Health increased by $2.1 billion to $25.9 billion on the back of growth in the number of people enrolled in value-based care and an expansion in the types and levels of care provided by its clinical teams.
Optum Rx boosted its revenue to $34.2 billion, an increase of $5.4 billion, according to the report. UnitedHealth said that the pharmacy benefit manager "deepened relationships" with existing customers while building out its services offerings, including a focus in specialty and community-based pharmacies.
Adjust scripts at Optum Rx reached 410 million compared to 380 million last year, UHG said.