Upcoming AWS Coverage on Humana Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 20, 2017 / Active Wall St. announces its post-earnings coverage on UnitedHealth Group Inc. (NYSE: UNH). The Company disclosed its first quarter fiscal 2017 results on April 18, 2017. The largest US health insurer exceeded sales and earnings expectations and also raised its outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of UnitedHealth Group's competitors within the Health Care Plans space, Humana Inc. (NYSE: HUM), is expected to report earnings on May 03, 2017 before market open. AWS will be initiating a research report on Humana following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on UNH; touching on HUM. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

For the three months ended March 31, 2017, UnitedHealth Group's revenues of $48.72 billion grew 9.4%, or $4.2 billion, compared to revenue of $44.5 billion in Q1 FY16. UnitedHealthcare's withdrawal from ACA Individual markets, combined with the 2017 health insurance tax deferral, reduced consolidated reported quarter revenues by approximately $1.6 billion and lowered the revenue growth rate by 4.1%. The Company's revenue number topped analysts' consensus of $48.37 billion.

For Q1 FY17, UnitedHealth Group's earnings from operations grew 15% y-o-y to $3.4 billion. Adjusted net earnings per share grew 31% to $2.37 per share. UnitedHealth Group's earnings numbers exceeded market expectations of $2.18 per share.

Segment Results

UnitedHealthcare

For Q1 FY17, UnitedHealthcare's revenues totaled $40.1 billion up 11.8% on a y-o-y basis. UnitedHealthcare grew to serve 2.5 million more people year-over-year across its employer-sponsored, Medicare, Medicaid and international medical benefit offerings, partially offset by a reduction of 900,000 people served through individual products as the Company withdrew from virtually all ACA Individual markets. In the reported quarter, UnitedHealthcare served 1.5 million more consumers, before a reduction of 765,000 people served through ACA Individual products, for net growth of 730,000 people.

For Q1 FY17, earnings from operations for UnitedHealthcare of $2.1 billion increased 15% on a y-o-y basis, driven by strong, diversified growth, and increased operating margins.

For Q1 FY17, UnitedHealthcare Employer & Individual revenues of $12.7 billion were essentially flat y-o-y due to ACA withdrawal and health insurance tax deferral effects. UnitedHealthcare Employer & Individual reported quarter underlying growth of 480,000 people served in commercial group plans was more than offset by a 765,000-member decline resulting from ACA Individual market withdrawals.

During Q1 FY17, UnitedHealthcare Medicare & Retirement grew revenues by $2.5 billion, or 17.7%, y-o-y to $16.6 billion. UnitedHealthcare served 8.7 million seniors with medical benefit products in the reported quarter, up 12% on a y-o-y basis. In the reported quarter, the business served 760,000 more seniors, including 675,000 through employer-sponsored group and individual Medicare Advantage products.

In Q1 FY17m UnitedHealthcare Community & State revenues grew $1.2 billion, or 15.8%, y-o-y to $8.9 billion, reflecting strong membership growth with an increasing mix of higher need individuals. UnitedHealthcare Community & State served 310,000 more people in the reported quarter.

Optum

In Q1 FY17, Optum revenues grew y-o-y by $1.6 billion, or 7.9%, to $21.2 billion. Optum's operating margin of 6% improved 40 basis points y-o-y. First quarter earnings from operations increased by double-digit percentages for every reporting segment, and overall earnings from operations grew $173 million, or 15.6%, y-o-y to $1.3 billion.

OptumHealth's revenues of $4.7 billion grew $735 million, or 18.4%, y-o-y, driven by growth in care delivery, behavioral services, and health financial services. OptumInsight's revenues grew 10.6% to $1.8 billion in Q1 FY17, driven by growth in revenue management services, business process services, and technology services. OptumInsight's contract backlog grew by more than $0.5 billion from the end of 2016, finishing Q1 at $13.1 billion.

OptumRx's Q1 FY17 revenues grew 4.7% y-o-y to $14.9 billion. OptumRx fulfilled 322 million adjusted scripts in the reported quarter, an increase of 15 million scripts or 4.9% over the prior year.

OptumHealth revenues of $4.7 billion grew $735 million, or 18.4% y-o-y, driven by growth in care delivery, behavioral services, and health financial services. OptumHealth serves approximately 85 million consumers - serving 6 million more people over the past year.

Cash Flow

UnitedHealth Group's cash flows from operations were $6.5 billion in Q1 FY17. The Company's adjusted cash flows were $2.0 billion compared to $2.3 billion in Q1 FY16, as strong underlying cash flow growth was impacted by roughly $800 million of offsets from ACA-related factors.

UnitedHealth Group's Q1 FY17 consolidated medical care ratio of 82.4% increased 70 basis points y-o-y, impacted by a 150-basis point increase from the health insurance tax moratorium offset by reduced levels of individual ACA business and other factors. Medical cost reserves developed favorably by $450 million in the reported quarter compared to $360 million in the year ago same period. UnitedHealth Group's Q1 FY17 operating cost ratio of 14.4% decreased 80 basis points y-o-y also due to the health insurance tax moratorium.

For Q1 FY17, UnitedHealthcare group's days claims payable of 50 days decreased one day y-o-y and sequentially; first quarter days' sales outstanding rose two days y-o-y and sequentially to 18 days, due to growth in government-based offerings.

Annualized return on shareholders' equity increased 300 basis points y-o-y to approximately 22% in Q1, while the debt to total capital ratio decreased 550 basis points y-o-y to 43.5% at March 31, 2017.

Outlook

UnitedHealth Group raised its financial outlook for FY17. The Company is now forecasting revenues of approximately $200 billion, GAAP net earnings of $9.10 to $9.30 per share, and adjusted net earnings in the range of $9.65 to $9.85 per share. Management projects cash flows from operations of approximately $12 billion for FY17.

Stock Performance

At the close of trading session on Wednesday, April 19, 2017, UnitedHealth Group's share price finished yesterday's trading session at $169.25, rising slightly by 0.39%. A total volume of 4.70 million shares exchanged hands, which was higher than the 3 months average volume of 3.65 million shares. The stock has surged 27.16% and 31.90% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 6.15%. The stock is trading at a PE ratio of 23.34 and has a dividend yield of 1.48%.

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SOURCE: Active Wall Street