Earnings The Doctor Ordered

By Billy Fisher | January 30, 2012 AAA

In the coming days, a number of the major health insurers in the U.S. will be reporting their earnings against an improving backdrop. A couple of the industry's biggest players have already reported their earnings, with some positive indications embedded in the results. Here is what investors can expect in the coming days as more earnings news continues to trickle in.
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Fully Covered
If the earnings of UnitedHealth Group (NYSE:UNH) are an indication of what is to come from its fellow competitors, shareholders of major insurers can remain cautiously optimistic as quarterly results are released in the coming days. The company recently reported Q4 EPS which was 24.5% above UnitedHealth's results in the prior year quarter. Total revenue rose by 7.9%. (For related reading, see Investing In The Healthcare Sector.)

The company has benefited from enrollment growth across the board. UnitedHealth Group added 1.06 million members to its commercial business in 2011 and another 325,000 members to its Part D prescription drug plans. It also bought back approximately $3 billion worth of its common stock. Shares of UnitedHealth have risen about 19% over the course of the past year.

Next Wednesday, Aetna (NYSE:AET) will check in with its Q4 results before the opening bell. Analysts are calling for the company to report a 55.0% pop in EPS versus its year-ago quarter, despite a 0.3% decrease in total revenue. Aetna's stock price has rallied 25% during the last 52 weeks.

Vital Signs
On Thursday of next week, Cigna (NYSE:CI) will announce its Q4 earnings before the market opens. The consensus on Wall Street is that the insurer will announce a 3.5% gain in EPS on a 1.4% uptick in total revenue in comparison to Cigna's prior year quarter.

The company is coming off a respectable Q3 in which adjusted income from operations grew by 9.1% and total revenue rose by 6.5% on a year-over-year basis. Cigna has notched particularly strong gains in enrollment in its behavioral care business. Shareholders have seen the value of their investment increase 12.6% since this time last year.

One other insurer that will be reporting its quarterly results in the coming days is Humana (NYSE:HUM). Analysts are expecting the company to report a 92.1% increase in EPS on a 10.6% advance in total revenue when compared to the same period last year. Humana is scheduled to announce its earnings before the market opens on February 6th. Its stock price has skyrocketed 45% in the last 52 weeks.

The Bottom Line
The major health insurers have slowly but surely been adding to their top lines as a decrease in unemployment has helped out enrollment numbers in their corporate plans. It remains to be seen as to whether or not these positive trends will continue over the long haul, but shareholders are liking them in the meantime. Investors will want to closely monitor the outlooks that will be provided by these insurers along with their Q4 earnings, and remain on the lookout for any negative trends that could slow the recent momentum of these companies. (For more on unemployment, see The Unemployment Rate: Get Real.)

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At the time of writing, Billy Fisher did not own shares in any of the companies mentioned in this article.

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