$UNH just dropped their 10Q- a form that breaks down company performance over the previous quarter and management's views for the coming future.
Taking the time to read and understand forms like this is how you beat the market over time. Let's jump in and see what we can learn:
Taking the time to read and understand forms like this is how you beat the market over time. Let's jump in and see what we can learn:
Firstly, the 10Q confirmed what we already know from listening to the earnings call:
Top line continues to grow, coming in at $111.6B for the quarter, an incredible number.
Bottom line took a hit, as we know. Earnings were down 35%, and came in at 5.15B for the quarter.
Top line continues to grow, coming in at $111.6B for the quarter, an incredible number.
Bottom line took a hit, as we know. Earnings were down 35%, and came in at 5.15B for the quarter.
We learne that medical cost pressures are broad based, rather than due to any one thing. Patients are seeing more doctors in outpatient visits, there's more unit costs and intensity, and the mix of patients was more expensive than originally forcast.
It isn't any one thing: healthcare is just more expensive.
Management acknowledges that they mispriced insurance for the current year. They note that their assumptions were "well short" of trend, which explains the divergence between top and bottom line.
It isn't any one thing: healthcare is just more expensive.
Management acknowledges that they mispriced insurance for the current year. They note that their assumptions were "well short" of trend, which explains the divergence between top and bottom line.
The key quote from management:" We continually evaluate and adjust our approach in each of the local markets we serve, considering relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio thresholds and similar revenue adjustments. We seek to balance growth and profitability across all these dimensions."
Translation: We are going to raise our prices to fix our mistakes in the past.
Translation: We are going to raise our prices to fix our mistakes in the past.
They also stated that there is 4B of M&A activity pending approval by the DOJ (the majority of this was the $AMED acquisition, which has been approved). They also highlighted that they are selling their south american operations, which they expect to close by the end of the year.
Other moves by management:
-The dividend was raised to $8.84/share annualized
-They were able to raise $3B via convertible notes (potentially for share buybacks, or to complete the $AMED acquisition?)
-The dividend was raised to $8.84/share annualized
-They were able to raise $3B via convertible notes (potentially for share buybacks, or to complete the $AMED acquisition?)
Overall, this 10Q doesn't tell us much that we didn't already know, but it is a nice look into the larger issue.
We heard from management that they understand why costs are up YoY, and we see that here in action.
I expect repricing to come, and profits to recover strongly going into 2026. I am as bullish as ever.
None of this is financial advice- I share this purely to share my personal views and as educational content. I'd encourage you to dig in and do your own research before making any investments.
We heard from management that they understand why costs are up YoY, and we see that here in action.
I expect repricing to come, and profits to recover strongly going into 2026. I am as bullish as ever.
None of this is financial advice- I share this purely to share my personal views and as educational content. I'd encourage you to dig in and do your own research before making any investments.
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