ELV - UnitedHealth ends week-long run-up after Q1 earnings

2023-04-14 13:36:24 ET

After six-straight sessions of gains, UnitedHealth ( NYSE: UNH ), the managed care bellwether, dropped ~3% on Friday despite raising its earnings outlook for 2023 with its better-than-expected Q1 financials.

About ~2.7M UNH shares have changed hands compared to the 65-day average of ~3.5M as the stock recorded the biggest intraday loss in over two months.

The earnings come at a time when managed care is bracing for headwinds in the Medicare Advantage (MA) and Medicaid markets.

UnitedHealth's ( UNH ) smaller MA rivals, Humana ( HUM ), CVS Health ( CVS ), and Alignment Healthcare ( ALHC ), also trended lower, as did those competing in the Medicaid market, Centene ( CNC ) and Elevance Health ( ELV ).

This year, the U.S. Centers for Medicare & Medicaid Services (CMS) trimmed 2024 payment rates for MA players, even though the final rates exceeded expectations last month.

However, Chief Executive Andrew Witty shrugged off concerns. "With the 2024 Medicare Advantage notice in hand, we now have greater clarity for the short- to midterm evolution of this important program," he said.

Meanwhile, a key pandemic-era provision for Medicaid recipients lapsed last month as pre-pandemic eligibility reviews began risking the benefits for millions of those enrolled in the state/federal healthcare program.

Witty expects the impacted Medicaid members to move to the company's other healthcare program. "And we expect to be serving more people in our benefit programs when this process is completed," he added.

"Now that the process has started, we're working with our state partners and others to provide as much information and support as possible so people can understand and access their best coverage options," Witty explained.

Read: Seeking Alpha contributor Pearl Gray Equity and Research downgraded UNH to Hold from Buy ahead of the earnings.

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