Analysts’ revenue estimates
On October 16, UnitedHealth Group (UNH) is expected to announce its third quarter of fiscal 2018 earnings. Its sales are expected to grow 12% YoY (year-over-year) to $56.3 billion. In the second quarter of fiscal 2018, it had sales of $56.1 billion, representing ~12.1% YoY growth, which was in line with analysts’ estimates.
In the above graph, you can compare UNH’s quarterly results with Wall Street estimates. Its peers Aetna (AET), Cigna (CI), and Anthem (ANTM) are expected to report sales growth of 2%, 8.8%, and 3.7%, respectively, in their next quarters.
Factors driving UNH’s performance
UnitedHealth Group expects to report strong sales in the third quarter of fiscal 2018 and after as it establishes itself as a consumer-centric global benefits player. It expects fiscal 2018 sales to be $223 billion–$225 billion. In its Medicare products, it’s had lower costs, higher consumer retention, and overall business growth, driven by value-based care.
According to UnitedHealh, value-based care is estimated to drive 5% key screening increases and lower emergency room use by 13%. Optum’s pharmacy care services are delivering higher client retention rates through digital platforms such as Rally. In the second quarter of fiscal 2018, OptumHealth rose ~7% for the number of people served, as well as an increase of 12% in revenue per person.
We need to look at more than revenue and sales, however. Let’s see in the next part what we can expect for UnitedHealth’s EPS.