Are you interested in a company whose share price shows an average annual growth rate of 22% over the past 15 years; has increased its annual payout for more than 15 consecutive years; and has almost $33 billion in the bank? asks Gordon Pape, editor of Internet Wealth Builder.
No, it’s not a tech stock. I’m referring to UnitedHealth Group (UNH), one of the world’s dullest and most rewarding companies.You may already be familiar with it. UNH has been on our recommended list since March 2014, when it was trading at $76.01 (figures in US dollars). It has been part of our highly successful Growth Portfolio for the same length of time.
UnitedHealth is the world’s largest health insurance provider by revenue. The stock has a market cap of about $450 billion. The financial numbers read more like those of a technology company than an insurer. In 2023, UNH reported revenues of $371.6 billion, up 14.6% year-over-year. Earnings attributable to common shareholders were $22.4 billion ($23.86 per share). The company’s return on equity was an impressive 27%.
UnitedHealth Care provides insurance coverage for employer plans and to individuals around the world. More than 50 million people are covered by its programs. It's Optum division, formed in 2011, is the technical branch of the company, providing data and analytics, pharmacy care services, population health, healthcare delivery, and healthcare operations.
The company reported first quarter revenue of $99.8 billion, up over $8 billion year-over-year. But it booked a loss of $1.53 a share, due in large part to the impact of a hacker attack on subsidiary Change Healthcare. It also recorded a $7 billion first quarter loss on the sale of its Brazilian operations. Adjusted earnings, which strip out one-time costs and profits, were $6.91 per share.
The firm said total cyberattack impacts in the first quarter amounted to $0.74 per share and the company estimates full year 2024 impacts of $1.15 to $1.35 per share. In the first quarter, this included $0.49 per share to support direct response efforts such as the Change Healthcare clearinghouse platform restoration.
The company estimates direct response costs of $0.85 to $0.95 per share for full year 2024 and another $0.30 to $0.40 per share for business disruption.
Looking ahead, the company updated its full year 2024 net earnings outlook to $17.60 to $18.20 per share to reflect the Brazil sale and the estimated direct response costs of the cyberattack. The company maintained its adjusted net earnings outlook of $27.50 to $28 per share.
The result of all this has been a pull back in the share price to $495.35 from the all-time high of $554.70 reached in early December. If you don’t already have a position, this is a good time to start building one, with the share price down over 10% from its high. Action now: Buy.
