2024 earnings roundup, after a dramatic year: UnitedHealth Group and Masimo

UnitedHealth Group’s annus horribilus closed out with a decent, but not up to earlier projections, financial report.

Having opened in February with the massive (and massively expensive) ransomware/hack of Change Healthcare, UHG didn’t have a lot of bright spots. Elevated utilization rates increased expenses; changes in Medicare Advantage reimbursements and the STAR ratings metholodogy changes reduced bonus payments.

Then, in the early, dim morning of their 4 December investor day in NYC, UnitedHealthcare’s CEO Brian Thompson was murdered while entering the New York Hilton Hotel. The manhunt and the controversy set off by the perpetrator’s so-called ‘manifesto’ exploded into a hurricane of severe public criticism on how plans process claims and treat members, a traditional and social media/online storm that only diminished around Christmas and the rise of other news. In literal fear for their lives, health plan executives took the lowest profiles they could manage. 

UHG’s earnings, while positive overall, reflected this uncertainty with lower Q4 revenue causing them to miss Street estimates. Share price fell over 6% today (Thursday). 

• UHG’s Q4 revenues were $100.8 billion versus $94.4 billion in the prior year, up 6.8%. Profit of $5.5 billion was flat versus prior year. UHG’s 2024 revenues were $400.3 billion, 7.7% higher than 2023’s $371.6 billion. 
• Health plan unit UnitedHealthcare’s 2024 revenues were $292 billion, up 6%, with operating earnings of $15.2 billion. US commercial members grew by 2.1 million.
• Their 2024 medical cost ratio — the percentage of premiums spent on medical care — rose to 85.5%, far higher than 2023’s 83.2%, exceeding analysts’ projections of 84.96% and far above the targeted 80%.
• Optum’s revenue, affected by the Change Healthcare hack and ransomware payments, still rose to $253 billion, up $26.3 billion or 12% versus prior year. The Optum Insight unit, which includes Change, had revenues of $18.8 billion, declining 1% because of the $867 million loss due to business disruption.

UHG release, FierceHealthcare, CNBC 

UHG also announced:

• The Optum Rx unit will now pass through 100% of rebates negotiated with drugmakers to their clients–insurers, states and unions. This is up from 98% since 2% have preferred other rebate models. FierceHealthcare
• UHG and Amedisys filed last week in the US District Court of Maryland to have the November Department of Justice suit dismissed. They cited that the DOJ did not adequately prove that the $3.3 billion acquisition would be anti-competitive. For one, the DOJ did not adequately define or provide detail on the geographic markets that would become be non-competitive. FierceHealthcare  They extended their deal deadline to the end of 2025 last month.
• Change Healthcare stated yesterday that it has ‘substantially’ completed notifying affected consumers of their breach. Interestingly, if you use a search engine to try to find the breach notice, you’ll have a great deal of trouble–because the source code contains a hidden “noindex” code on the notice. ‘Noindex’ code tells search engines to ignore the web page–and has been there, apparently, since 20 November 2024. UHG has also not publicly disclosed a more exact number of those affected beyond the long-ago estimate of 100 million. TechCrunch   The state of Nebraska has sued UHG, Optum, and Change over the breach [TTA 19 Dec 2024] 

Masimo, ending a dramatic year of its own, now firmly in the control of Politan Capital Management despite flying lawsuits with former CEO Joe Kiani and an SEC investigation announced last month, issued its preliminary 2024 closing financials and their 2025 guidance. What’s hot–their consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry. What’s not–their audio business under Sound United, which is on the block.