UnitedHealthcare Shares Growth, COVID-19 Impacts, 2022 Forecast

Revenue, enrollment growth

The payer’s commercial membership dipped in the fourth quarter of 2020. However, it has been slowly recovering and rose to 26.55 million in the third quarter of 2021.

UnitedHealthcare saw more commercial members covered under risk-based contracts to hit 7.96 million members, exceeding the number of consumers covered under risk-based contracts in the same quarter of 2020. However, the payer’s membership covered under fee-for-service contracts also increased from 18.4 million in the third quarter of 2020 to 18.59 million in 2021.

The payer served 320,000 more members in risk-based and self-funded contracts in 2021. It attributed its revenue growth in part to this expansion.

Meanwhile, the payer’s Medicare Advantage enrollment has been steadily growing from September 30, 2020 to September 30, 2021. In the third quarter of last year, UnitedHealthcare had 5.6 million Medicare Advantage customers. By the third quarter of 2021, that number had swelled to 6.4 million.

The payer expects its Medicare Advantage population—including its dual special needs plan membership—to grow by 900,000 more enrollees before 2021 comes to an end.

Medicaid membership grew along a similar trajectory. The payer expanded its reach in this segment into North Carolina, Kentucky, and Indiana. UnitedHealthcare has signed more contracts in 2021 to serve beneficiaries in Nevada, Ohio, and Hawaii. The payer will also serve Missouri residents, now that the state officially expanded its Medicaid program.

Coronavirus pandemic impacts

In the earnings call, John Rex, executive vice president and chief financial officer at UnitedHealth Group, stated that the coronavirus pandemic had created some unexpected costs, but ultimately the virus impacted revenues as anticipated.

“During the third quarter, while direct COVID care and testing costs ran above the expectations we had nearly a year ago, we again saw elective care offsetting the impacts of higher case rates, much like previous cycles in the pandemic,” Rex explained.

The payer saw a significant influx of hospitalizations due to COVID-19 in the third quarter, climaxing at 30,000 hospitalizations in the month of August.

“While the pandemic-related impacts remain difficult to predict, given the current trends, we would expect a lower unfavorable COVID impact than experienced in 2021,” Rex told investors. 

“Still, as the dramatic variation of the last 20 months has demonstrated to all, prudent management suggests we should offer an outlook respectful of the fact that the current situation is without precedent.”

Projections for 2022

Despite these uncertainties, the payer’s projections for 2022 echo its projections for 2021. 

In the 2020 fourth quarter earnings call, UnitedHealthcare projected that net earnings for 2021 would land somewhere between $16.90 per share and $17.40 per share, with adjusted net earnings of $17.75 to $18.25 per share.

In the 2021 third quarter earnings call, Rex said that early analyses gave reason to believe that UnitedHealthcare’s adjusted earnings per share for 2022 would land at the higher end of the company’s projections.