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UnitedHealth Earnings Beat Estimates As Revenues Jump 9%

From UnitedHealth Group Inc (NYSE:UNH) early Tuesday posted better-than-expected Q4 earnings results and stood by its full-year outlook, as the company’s medical care ratio improved throughout 2016.

The Hopkins, MN-based diversified healthcare giant reported Q4 EPS of $2.11, which was $0.04 better than the Wall Street consensus estimate of $2.07. Revenues rose 9.0% from last year to $47.52 billion, also beating out analysts’ $47.12 billion view.

Looking ahead, UNH reaffirmed its prior full-year 2017 EPS guidance ranging from $9.30 to $9.60, which straddles Wall Street’s EPS estimate of $9.51. UnitedHealth also maintained its $197 to $199 billion revenue forecast, which is also in-line with analysts’ $198.69 billion view.

For the full year 2016, UNH noted its consolidated medical care ratio fell 50 basis points from the prior year to to 81.2%. This ratio is an important metric used by health insurers to measure medical costs as a percentage of premium revenues. A ratio under 100 reflects a profit, while over 100 means a net loss (so lower is better). In Q4, the company’s medical care ratio declined 190 basis points to 80.8%.

The company commented via press release:

“We are privileged today to serve more people in more ways than ever before, and we know further growth in 2017 and beyond rests on continuing to drive ever higher quality and increasing value to consumers, care providers and customers across our spectrum of businesses,” said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.

UnitedHealth Group Inc shares rose $0.60 (+0.37%) in premarket trading Tuesday. Year-to-date, UNH has gained 1.10%, versus a 1.57% rise in the benchmark S&P 500 index during the same period.

UNH currently has a POWR Rating of A (Strong Buy), and is ranked #1 of 7 stocks in the Medical – Health Insurance category.

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