Why UnitedHealth Stock Plunged on Friday

Investors love it when one of their companies beats analyst estimates, but that doesn’t always result in that company’s stock price rising in response. That was the case for a large health insurance company on Friday. UnitedHealth (UNH -3.37%), shares closed more than 3% lower after reporting its latest quarterly results. It did not contrast well with righteousness. S&P 500 On this day, the index rose slightly.

UnitedHealth posted growth in the fourth quarter, but…

In the final quarter of 2023, UnitedHealth reported revenue of $94.4 billion, 14% higher than the same period in 2022. Non-GAAP (adjusted) net income also increased at about the same rate, to just under $5.8 billion. On a per-share basis, the latter item changed to $6.16 per share.

Both results exceeded analyst expectations. On average, forecasters tracking the stock were modeling a peak of $91.9 billion, or just over $5.99 per share in adjusted earnings.

Although these numbers were encouraging, investors were concerned about UnitedHealth’s costs. As with revenue and profitability figures, health care costs were noticeably higher than analysts had expected, as a significant number of policyholders opted for the respiratory syncytial virus (RSV) vaccine and related services. The increase in COVID-19 patients also played a role.

Maintain current strategy

UnitedHealth hinted in its earnings call that it would continue on its current strategic course. “UnitedHealth Group is well-positioned to build on our efforts to broadly improve patient care and consumer experiences and continue strong, balanced growth in 2024,” said CEO Andrew Witty.