What To Expect From UnitedHealth’s Q2 Results
UnitedHealth (NYSE:UNH), the largest health insurer in the U.S., is scheduled to announce its second quarter earnings on Tuesday, July 19. In the first quarter, UnitedHealth reported robust earnings with overall revenues growing over 24.5% year-over-year (y-o-y) driven by 54% growth in the Optum division. We expect the company’s Optum division to carry the growth momentum forward, taking advantage of inter-division integration at UnitedHealth that allows Optum to offer services to customers of the company’s health insurance businesses. The company is expected to report revenues of $44.5 billion and earnings of about $1.91 per share in the upcoming Q2 results.
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UnitedHealth’s Optum division continued its successful run during the first quarter this year, with revenues growing 54% y-o-y to $19.7 billion. Although all three segments within the Optum division – OptumHealth, OptumInsight and OptumRx – reported robust growth, OptumRx will be in special focus during the second quarter. In the OptumRx segment, the volume of retail prescriptions filled increased by 71% to about 252 million adjusted scripts during the first quarter leading to robust top line growth in the Pharmacy Benefit Management (PBM) business. It will be interesting to see how much of this growth momentum was maintained in the second quarter.
In addition to taking advantage of inter-division integration, UnitedHealth has also expanded its Optum business through acquisitions, notably Catamaran (for $12.8 billion in July 2015) and Helios (January 2016). Catamaran helped the business report a robust 72% in Q1, and it will be interesting to see the impact of Helios on the company’s performance in the second quarter. UnitedHealth’s rival in the PBM space, CVS Health (NYSE:CVS), also completed a major acquisition recently with the buyout of Target’s pharmacy and clinic businesses for about $1.9 billion.
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