ETFs in Focus After UnitedHealth’s Mixed Q4 Earnings Report

Minneapolis: UnitedHealth Group, the biggest health insurer in the U.S., just released its fourth-quarter results for 2024. They did well on earnings, beating expectations, but fell short on revenue. As a result, their stock took a hit, dropping nearly 6% right after the news.

This has put a spotlight on several ETFs that have a big stake in UnitedHealth. Funds like the iShares U.S. Healthcare Providers ETF and the Health Care Select Sector SPDR Fund are now in the limelight.

Earnings per share came in at $6.81, which was better than the expected $6.71 and also up from last year’s $6.16. However, revenues grew by 6.8% to $100.8 billion, which was below the anticipated $102.2 billion. The revenue miss was mainly due to some struggles in their health insurance sector.

On a brighter note, Optum, a part of UnitedHealth, saw its revenues rise by 9.4% to $65.1 billion. They served 4.7 million people in 2024 and plan to expand that to 650,000 more patients in 2025. The medical ratio, which shows how much of the premiums go to medical services, increased to 87.6%. Management expects this ratio to stay between 86% and 87% for 2025.

UnitedHealth also confirmed its revenue forecast for 2025, estimating between $450 billion and $455 billion, with earnings per share projected at $29.50 to $30.00.

Now, let’s take a closer look at the ETFs that are closely tied to UnitedHealth. The iShares U.S. Healthcare Providers ETF tracks companies in health insurance and specialized treatment, with UnitedHealth making up 23% of its holdings.

The Health Care Select Sector SPDR Fund is another popular choice, holding 61 securities and featuring UnitedHealth at 9.7%. It’s got a hefty asset base of $38.2 billion and trades around 8 million shares daily.

Then there’s the iShares U.S. Healthcare ETF, which includes 105 healthcare companies, with UnitedHealth at 9.3%. It has a solid asset base of $3.1 billion and a good trading volume.

The Vanguard Health Care ETF tracks a wide range of healthcare stocks, with UnitedHealth at 9%. It’s also quite popular, boasting $17 billion in assets.

Lastly, the Fidelity MSCI Health Care Index ETF provides exposure to 368 healthcare stocks, with UnitedHealth holding 8% of the assets. It has a good asset base of $2.6 billion and decent trading volume.

So, if you’re keeping an eye on healthcare investments, these ETFs are definitely worth watching after UnitedHealth’s latest earnings report.