Mackenzie Tatananni

UnitedHealth Group is set to report earnings before markets open Thursday, and investors are waiting to see if the company's insurance division will stage a comeback after a disappointing last quarter.

Analysts polled by FactSet are anticipating first-quarter earnings per share of $7.29 on sales of $111.6 billion, compared with earnings per share of $6.91 on revenue of $99.8 billion a year ago.

Shares of UnitedHealth have gained 15% this year, while the S&P 500 and Dow Jones Industrial Average have fallen 11% and 7%, respectively. The stock was about flat on Wednesday versus the S&P's 2.2% drop and the Dow's 1.7% decline.

UnitedHealth has also outperformed its peer group this year, with the iShares U.S. Healthcare Providers exchange-traded funds gaining just shy of 13%. The fund counts UnitedHealth among its largest holdings.

Boosting the stock price as of late is the appeal of UnitedHealth and peers as a tariff-proof investment. Managed-care players are domestic companies that operate within the U.S. healthcare system, meaning the risks associated with higher import taxes don't apply.

UnitedHealth and smaller peers CVS Health and Humana rallied on Monday after the Trump administration said it would significantly increase reimbursement rates for Medicare insurers next year.

Insurers that contract with Medicare to offer Medicare Advantage plans receive payments from the government, offered at a per capita rate, and adjusted based on enrollee characteristics. Insurers came under pressure last year as healthcare-utilization rates rose amid lower payment rates.

The 5.06% Medicare rate boost is expected to generate more than $25 billion in additional revenue for the healthcare industry, and is more than twice the 2.23% increase proposed under the Biden administration.

It's good news for UnitedHealth, which is looking to stage a recovery after its fourth-quarter earnings, released in mid-January, left much to be desired. Shares sank as revenue failed to meet expectations, driven by weakness in the company's UnitedHealthcare insurance division, with the fourth-quarter print pointing to higher medical costs across the sector.

Investors will be looking to see if the rapidly changing macro, including the latest Medicare reimbursement rate hike, will impact forecasts after the company reaffirmed its 2025 performance outlook in January. For now, UnitedHealth stock seems well-positioned to ride out the storm.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 16, 2025 15:58 ET (19:58 GMT)

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