UnitedHealth Stock (UNH) Down as $3.3B Secret Sales Raise Eyebrows
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UNH stock was down over 2% during Tuesday's regular trading session as investors reacted to the company's accounting move and looked ahead to its Q225 earnings report on July 29.
The Deals That Boosted Profits
At the end of 2024, UnitedHealth was facing rising medical costs and regulatory pressures that were hurting profits. The company then offset this by making the last-minute asset sales to private equity firms. Without the asset sales, UNH would have missed earnings for the first time in over 15 years.
Thus, UNH added the gains to its adjusted earnings, which helped it report adjusted EPS of $6.81 in Q4 and beat the forecast by $0.07.
UNH's Unusual Accounting Practices
It must be noted that UNH left out a $7.1 billion loss from its Brazil exit, calling it a one-time event, but included the $3.3 billion gain from U.S. asset sales in its core earnings. Analysts say that's allowed under U.S. rules, though some called it 'unusual' and said the earnings were low-quality and non-recurring.
This new finding adds to the growing list of challenges UnitedHealth is already facing. The company is under criminal investigation by the DOJ for alleged Medicare billing irregularities. In May, CEO Andrew Witty abruptly resigned, replaced by former CEO Stephen Hemsley, to lead the company as it deals with growing regulatory pressure.
Is UNH a Good Buy Right Now?
Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 18 Buys, seven Holds, and one Sell assigned in the last three months. At $357.14, the average UnitedHealth stock price target implies a 21.54% upside potential.
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