UnitedHealth Group (NYSE: UNH) reported a robust performance for the fourth quarter of 2024, showcasing significant growth across its various operations.
The company achieved revenues of $100.8 billion, marking a notable increase from the $94.4 billion reported in the same period the previous year. The company’s comprehensive approach primarily drove this growth to serve more individuals through its two primary businesses, UnitedHealthcare and Optum. Additionally, the earnings from operations for the quarter reached $7.8 billion, a slight increase from the $7.7 billion reported in the fourth quarter of 2023.
UnitedHealth Group Falls Short on Q4 Revenue Expectations, Beats EPS
The net margin for the quarter stood at 5.5%, slightly lower than the 5.8% recorded in the previous year. However, the adjusted net earnings per share for the quarter were $6.81, reflecting an improvement from the $6.16 reported in the same period last year.
The company also reported cash flows from operations amounting to $24.2 billion for the entire year, 1.6 times the net income. This strong cash flow performance allowed UnitedHealth Group to return over $16 billion to shareholders through dividends and share repurchases in 2024.
UnitedHealth Group’s actual performance in the fourth quarter exceeded market expectations. Analysts had projected an earnings per share (EPS) of $6.74, whereas the company delivered an adjusted EPS of $6.81. This positive variance can be attributed to the company’s strategic efforts to expand its consumer base and enhance operational efficiencies.
Furthermore, the company’s revenue for the quarter was slightly below the expected $101.61 billion, coming in at $100.8 billion. Despite this minor shortfall, the overall revenue growth of 8% year-over-year underscores the company’s ability to adapt and thrive in a competitive healthcare market.
The company’s medical care ratio increased to 85.5% from 83.2% in 2023, influenced by Medicare funding reductions and Medicaid redeterminations. However, UnitedHealth Group improved its operating cost ratio to 13.2%, down from 14.7% in the previous year, reflecting gains from business portfolio refinement and enhanced operating efficiencies.
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UnitedHealth Group Reaffirms Outlook for 2025
UnitedHealth Group has reaffirmed its performance outlook for 2025, initially set in December 2024. The company anticipates revenues to range between $450 billion and $455 billion, with net earnings per share expected to be between $28.15 and $28.65. Adjusted net earnings per share are projected to be in the range of $29.50 to $30.00. This guidance reflects UnitedHealth Group’s confidence in its strategic initiatives and ability to continue delivering value to shareholders and consumers.
The company’s focus on expanding its consumer base and enhancing its service offerings is expected to drive growth in the coming year. UnitedHealth Group plans to increase the number of patients served under value-based care arrangements, with Optum Health targeting an additional 650,000 patients in 2025. The company also aims to capitalize on its expanded relationships with state customers, which is expected to contribute to a return to growth in the number of people served by its state-based community offerings.
Overall, UnitedHealth Group’s strong performance in the fourth quarter of 2024 and its positive outlook for 2025 positions the company well for continued success in the evolving healthcare landscape.
Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
