This healthcare stock gave investors 100 billion reasons to buy

It's early days in this latest earnings season, but it already looks like we could have one winner in healthcare — head down. united health group (UNH 0.30%).

With the season in full swing, the sprawling health insurance company and service provider announced its first quarter financial results. These not only showed very encouraging growth dynamics across key fundamentals, but also exceeded analyst expectations. Read UnitedHealth's Health Quarterly Digest.

First quarter growth and resilience

You know you're dealing with a large and important company when you see quarterly sales of just under $100 billion (yes, billion with a “b”). ). UnitedHealth's first quarter revenue was $99.8 billion, a significant 9% increase from the same period last year. It can also be caused by concentrated cyberattacks on companies. Taking this incident into account, his adjusted revenue would be just over $100 billion.

In terms of profitability, UnitedHealth's non-GAAP (adjusted) net income was $6.43 billion, an improvement of nearly 9% from the year-ago period. On a per-share basis, that number jumped to $6.91. Both items comfortably beat analysts' average expectations. Collectively, forecasters tracking the stock had modeled total revenue of less than $99.3 billion and adjusted net income of $6.62 per share.

Management attributed growth in the underlying UnitedHealthcare insurance segment to an increase in the number of people insured (and the premiums paid for insurance). The company said its customer list grew by 2 million people during this period.

From a cost perspective, the most damaging item this quarter was cyberattacks. It targeted the vast company Change Healthcare's billing and payment management division. Direct response and business interruption costs resulting from the ambush significantly hurt our results, amounting to $0.74 per share in the quarter alone. It's important to note here that the adjusted profit figures include business interruption costs, but not the (much higher) direct response costs.

Days after announcing these quarterly results, UnitedHealth updated the public on its ongoing investigation into cyberattacks. It said files containing protected health information and personally identifiable information were compromised in the incident. However, it added, “To date, the company has not seen any evidence that materials such as doctor's charts or complete medical histories were leaked from the data.”

Future concerns top cyber concerns

That's probably one reason UnitedHealth left its full-year adjusted net income outlook unchanged. The company is still modeling that number as $27.50 to $28.00. This compared favorably to the $25.12 the company earned in 2023, which was higher than the $22.19 it earned the year before.

Cyberattacks aside, overall it was a good quarter for UnitedHealth. The company has recorded growth in key areas of ever-increasing customer premium payments and looks set to continue on its path to improved financial performance.

If I were a shareholder, I would be worried about cyber attacks. Management has responded admirably to this incident, transparently detailing the financial impact, but not knowing how to mitigate operational damage (or to address the possibility of new hacks). I would like to know more about whether it is intended to prevent sex. In this world, uncertainty about cyber protection is not a good thing. Therefore, it would be a good idea for company leadership to address cyber protection more comprehensively in the near future.

But that being said, I think UnitedHealth has enough upside to be a good stock to own. It will certainly continue to benefit Americans as they age and need more health care. The company also pays a reliable quarterly dividend that is well supported by free cash flow. Its 1.5% yield is competitive with other large insurance companies (e.g. Elevance Health(1.2%).