Let’s dig into the relative performance of UnitedHealth (NYSE: UNH) and its peers as we unravel the now-completed Q2 health insurance providers earnings season.
Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.
The 12 health insurance providers stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 3.5% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 9.3% on average since the latest earnings results.
UnitedHealth (NYSE: UNH)
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
UnitedHealth reported revenues of $111.6 billion, up 12.9% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ full-year EPS guidance estimates.
“UnitedHealth Group has embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society broadly,” said Stephen Hemsley, chief executive officer of UnitedHealth Group.
Interestingly, the stock is up 20.6% since reporting and currently trades at $340.10.
Is now the time to buy UnitedHealth? Access our full analysis of the earnings results here, it’s free.
Best Q2: CVS Health (NYSE: CVS)
With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE: CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.
CVS Health reported revenues of $98.92 billion, up 8.4% year on year, outperforming analysts’ expectations by 5.1%. The business had a stunning quarter with an impressive beat of analysts’ same-store sales estimates and a beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 18.3% since reporting. It currently trades at $73.70.
Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it’s free.
Oscar Health (NYSE: OSCR)
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Oscar Health reported revenues of $2.86 billion, up 29% year on year, falling short of analysts’ expectations by 3.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
Oscar Health delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 29.7% since the results and currently trades at $17.92.
Read our full analysis of Oscar Health’s results here.
Humana (NYSE: HUM)
With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Humana reported revenues of $32.39 billion, up 9.6% year on year. This number beat analysts’ expectations by 1.7%. It was a strong quarter as it also recorded a solid beat of analysts’ full-year EPS guidance estimates.
The company added 3,200 customers to reach a total of 14.84 million. The stock is up 16.4% since reporting and currently trades at $271.02.
Read our full, actionable report on Humana here, it’s free.
Clover Health (NASDAQ: CLOV)
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
Clover Health reported revenues of $477.6 million, up 34.1% year on year. This print surpassed analysts’ expectations by 1.7%. Zooming out, it was a satisfactory quarter as it also produced full-year EBITDA guidance beating analysts’ expectations but a significant miss of analysts’ EPS estimates.
The company added 2,905 customers to reach a total of 106,323. The stock is up 9.7% since reporting and currently trades at $3.11.
Read our full, actionable report on Clover Health here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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