HUM

UnitedHealth Group Forecasts First Annual Revenue Decline in Decades

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Image Source: TradingView By Brian Nelson, CFA On January 27, UnitedHealth Group (UNH) reported mixed results for its fourth quarter of 2025 with non-GAAP earnings per share coming in-line with expectations, but revenue missing the mark. Consolidated revenues for 2025 were $447.6 billion, representing 12% year-over-year growth. For 2025, earnings from operations were $19 billion, and the company posted a net margin of 2.7%, while cash flow from operations was $19.7 billion, or 1.5x net income. For 2025, UnitedHealthcare expanded revenues 16%, while Optum expanded revenues 7% on the year. Full year adjusted net earnings were $16.35 per share. Management had the following to say about the results: We confronted challenges directly and finished 2025 as a much stronger company, … Read more

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

UnitedHealth Group’s Restored 2025 Outlook Falls Below Consensus Estimates

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Image Source: TradingView By Brian Nelson, CFA UnitedHealth Group (UNH) reported disappointing second quarter results and issued an outlook for 2025 that came in below expectations. The firm’s second-quarter 2025 revenue grew $12.8 billion year-over-year to $111.6 billion thanks to growth at both UnitedHealthcare and Optum. Second-quarter earnings from operations, however, came in at $5.2 billion, down from $7.9 billion in the same period a year ago. Net earnings were $4.08 per share, below the consensus estimate of $4.45 per share. UnitedHealth Group’s second quarter consolidated medical care ratio of 89.4% was up 430 basis points year-over-year. Management had the following to say about the results: UnitedHealth Group has embarked on a rigorous path back to being a high-performing company … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

UnitedHealth Group’s 2025 Outlook Remains Robust

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Image: UnitedHealth Group’s shares have been choppy the past couple years. By Brian Nelson, CFA UnitedHealth Group (UNH) reported mixed fourth quarter results on January 16 with revenue coming in a bit light of consensus and non-GAAP earnings per share beating what the Street was looking for. UnitedHealth Group’s 2024 revenues grew 8% year-over-year to $400.3 billion, while full year 2024 earnings from operations came in at $32.3 billion. Adjusted earnings from operations of $34.4 billion exclude cyberattack direct response costs and South American impacts. The company’s full year medical care ratio was 85.5% compared to 83.2% in 2023. The higher medical care ratio was due to revenue effects of CMS’s Medicare funding restrictions, member mix, and the timing of … Read more

UnitedHealth Group Reports Messy Second Quarter Results

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Image: UnitedHealth Group’s shares have been choppy since the beginning of 2023. By Brian Nelson, CFA UnitedHealth Group (UNH) reported messy second quarter results on July 16 that showed a beat on the bottom line, but in-line performance on the top line. The healthcare giant reported revenue of $98.9 billion, up $6 billion from the same period a year ago thanks to “strong expansion in people served domestically at its Optum and UnitedHealthcare” divisions. Second quarter earnings from operations came in at $7.9 billion, which included a $1.1 billion headwind from “unfavorable cyberattack effects.” Adjusted earnings from operations, which include business disruption impacts but exclude cyberattack direct response costs and the reclassification of its remaining South American operations as held … Read more

UnitedHealth Group Reiterates 2024 Adjusted Net Earnings Outlook

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Image: UnitedHealth Group’s shares have been choppy during the past couple years. By Brian Nelson, CFA On April 16, UnitedHealth Group (UNH) reported better-than-expected first quarter 2024 results. Revenue advanced nearly $8 billion on a year-over-year basis, to $99.8 billion, while adjusted earnings per share came in at $6.91. The company’s results were quite messy given the impact of the recent cyberattack on its business as well as the sale of its Brazil operations. UnitedHealth Group noted that the cyberattack impact in the first quarter was $0.74 per share, and the firm expects the full year 2024 impact to be $1.15-$1.35 per share. The company also recorded a largely non-cash $7 billion charge in the quarter due to the sale … Read more

Pfizer 6% Dividend Yield Speaks of Considerable Risk, Free Cash Flow Coming Up Short

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Image: Pfizer’s shares have been under considerable pressure the past few years. By Brian Nelson, CFA  Pfizer’s (PFE) revenue has faced pressure of late from expected declines in COVID-related sales from Comirnaty and Paxlovid, as the pharma giant navigates a post-COVID-19 world. However, excluding weakness from COVID-19 related revenue, the company’s underlying revenue grew 7% during 2023. Pfizer is working to build a strong oncology portfolio as it strives to realize billions in annualized cost savings to get to the other side of its troubles.   Image: Pfizer’s 2024 financial guidance. For the full-year 2024, Pfizer is targeting revenue in the range of $58.5-$61.5 billion (was $58.5 billion in 2023) and adjusted diluted earnings per share in the range of … Read more

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?

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Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. By Brian Nelson, CFA We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key … Read more

Eli Lilly’s Shares Have More Than Doubled During the Past 52 Weeks

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Image: Eli Lilly’s shares have been on a tear these past few years. By Brian Nelson, CFA On February 6, Eli Lilly (LLY) reported excellent fourth-quarter results that showed revenue and non-GAAP earnings per share coming in better than expectations. The company’s fourth-quarter results were bolstered by sales of diabetes and weight-loss drug Mounjaro, which saw sales in the quarter leap to ~$2.2 billion from ~$279 million in the year ago period. We continue to be in awe of the sales momentum behind GLP-1 receptor agonists, and the opportunity continues to be robust, despite already rapid sales acceleration. Though Eli Lilly trades at a premium to the high end of our fair value estimate range, we may be low in … Read more