We’re taking a look at some of the major companies reporting earnings in the week of July 15-July 19, across a variety of sectors. UnitedHealth Group and Novartis showcased strong growth, while Johnson & Johnson and Elevance Health presented more mixed results. Abbott Laboratories also reported solid results, driven by its medical devices segment, while facing challenges in its diagnostics business due to waning COVID-19 testing demand. This week’s earnings reports offer insights into the broader healthcare industry’s performance and future trajectory.
UnitedHealth Group
UnitedHealth Group (UHG) demonstrated a significant turnaround in its second quarter of 2024, posting a $4.2 billion profit after a challenging first quarter that was marked by a significant cyberattack on Change Healthcare and the divestiture of its Brazilian operations, resulting in a $1.4 billion loss in Q1. Despite these challenges, UHG still managed to report revenues of $99.8 billion in Q1 2024, representing nearly an $8 billion year-over-year growth. This revenue performance contributed to the company’s financial results in Q2, when revenues were $98.9 billion. Comparing this performance to Q2 2023, when revenues were $94.5 billion, the growth trajectory is evident.
UnitedHealth Group is an American multinational health insurance and services company that offers products through two business platforms: UnitedHealthcare, which provides health care coverage and benefits services; and Optum, which provides information and technology-enabled health services.
Optum emerged as a primary catalyst for growth during the most recent quarter, with revenue increasing nearly 12% to $62.9 billion during Q2:24 from $56.3 billion during Q2:23. This growth was fueled by the strong performance of both Optum Health and Optum Rx, the company’s pharmacy benefit manager, which each experienced a 13% revenue increase compared to the year-ago quarter.
Meanwhile, UnitedHealthcare, UHG’s insurance arm, also contributed to the company’s success by adding 2.3 million commercial customers, bringing its total global membership to 50.4 million beneficiaries. Despite the challenges posed by the cyberattack, UHG made significant progress in restoring systems and providing financial support to affected healthcare providers. The company has invested more than $9 billion in advance funding and interest-free loans to mitigate the impact of the disruption. While the cyberattack continues to present challenges, UHG reaffirmed its adjusted net earnings outlook for the year, demonstrating confidence in its ability to navigate these headwinds.
Novartis
Novartis, a multinational pharmaceutical corporation based in Basel, Switzerland, delivered a strong performance in the second quarter of 2024, marked by a 43% surge in net income and a 19% increase in core operating income compared to Q2 2023. The company’s top line also expanded, with net sales climbing 11%. These positive results were driven by strong sales of key products like Kesimpta, Kisqali and Cosentyx.
“Our performance reflects continued strong momentum of our key growth drivers, both in the U.S. and ex-U.S., which has allowed us to upgrade our [fiscal year] 2024 guidance,” stated Novartis CEO Vas Narasimhan.
Buoyed by this performance, Novartis raised its full-year 2024 core operating income guidance to the mid-to-high teens, up from the previously forecasted low double-digit to mid-teens range. This adjustment reflects Novartis’ strategic outlook for the future. The company’s emphasis on research and development, along with pipeline expansion, underscores its commitment to sustained growth.
However, despite Novartis’ optimism, the pharmaceutical industry faces significant challenges, including increasing pricing pressures, patent expirations and the evolving regulatory landscape. Novartis, like its peers, will need to navigate these complexities to sustain its momentum.
Johnson & Johnson
Johnson & Johnson (J&J), an American multinational pharmaceutical, biotechnology and medical technologies corporation headquartered in New Brunswick, New Jersey, reported mixed results for the second quarter of 2024. While the company’s top line grew 4.3% year-over-year to $22.4 billion, driven by strong performance in its pharmaceutical and medical device segments, overall net earnings fell to $4.6 billion, a 12.8% decline compared to $5.4 billion for the same quarter the previous year.
Innovative Medicine, J&J’s pharmaceutical division, was a standout performer, with key products like Darzalex, Erleada and Tremfya contributing significantly to sales growth. This division’s strength was instrumental in offsetting challenges faced by other parts of the business.
While the decline in net earnings is a concern, the company’s strong revenue growth and performance in key areas, particularly within its pharmaceutical division, provide a positive outlook. The raised full-year guidance certainly signaled confidence in the company’s future. However, investors will likely focus on the ongoing performance of its pharmaceutical and MedTech divisions, as well as the impact of potential economic challenges and regulatory changes.
“Johnson & Johnson’s second quarter performance reflects our relentless focus on advancing the next wave of medical innovation and resulted in strong sales and adjusted operational earnings per share growth,” said Joaquin Duato, Chairman and Chief Executive Officer.
Duato expressed optimism for the company’s future, citing a robust product pipeline, including upcoming regulatory milestones for Rybrevant and Tremfya, as well as the integration of recent acquisitions like Shockwave Medical. Shockwave was acquired in April 2024 for approximately $13.1 billion including cash acquired.
Despite the overall decline in net earnings, J&J remains confident in its long-term growth prospects. However, the company faces industry-wide challenges such as increased competition and pricing pressures, which will require careful navigation in the coming quarters.
Elevance Health
Elevance Health reported its second-quarter earnings on July 17. While the Indianapolis-based health insurer faced headwinds from Medicaid redeterminations, its diversified business model and strategic initiatives drove overall growth.
As CEO Gail Boudreaux stated, “Second quarter results reflect the power of our diversified business and thoughtful execution of our strategic initiatives during a dynamic time for our industry, as we remain steadfast in our purpose to improve the health of humanity. We have prudently maintained our full-year outlook and are confident in the earnings power of our Health Benefits and Carelon businesses, which underpin our long-term targets.”
The health insurer’s total membership declined by 5% compared to the prior year, primarily due to losses in Medicaid enrollment as states resumed eligibility checks. This shift in membership impacted the Health Benefits segment, leading to a 2% decrease in operating revenue. However, the Carelon division countered these challenges with a 10% increase in operating revenue, driven by the January 2024 acquisition of Paragon Healthcare and the expansion of risk-based medical benefit and behavioral health management programs.
Despite industry-wide pressures, Elevance reaffirmed its full-year earnings outlook, reflecting confidence in its core businesses. The company’s financial performance was bolstered by improved operational efficiency, as evidenced by a reduction in days in claims payable, which is a measure of the average time it takes a company to pay claims to providers. The company reduced its days in claims payable to 45.3 days as of June 30, 2024, reflecting a decline of 3.7 days from the previous quarter. This improvement was attributed to both industry-wide factors that impacted claims receipts earlier in the year and internal operational enhancements.
Looking ahead, Elevance is closely monitoring Medicaid cost trends and expects to see a gradual recovery in Medicaid membership. The company’s strategic focus on expanding care delivery capabilities through acquisitions and innovative programs positions it well for long-term growth and success.
Abbott Laboratories
Chicago, Illinois-based Abbott Laboratories announced its earnings results on July 18, 2024. Abbott Laboratories is an American multinational medical devices and healthcare company offering solutions for cardiovascular health, diabetes management, diagnostic testing, nutrition, chronic pain and more.
Abbott’s total worldwide sales climbed to $10.37 billion, marking a 4% increase compared to the same period last year. This growth was primarily driven by a strong performance in its Medical Devices segment, which experienced a double-digit increase in sales fueled by new product launches and robust demand for diabetes care solutions.
While Abbott’s overall revenue surged, net earnings dipped slightly due to a decline in COVID-19 testing sales, which have been tapering off as the pandemic subsides. However, the company’s core diagnostics business demonstrated resilience, with a 5.9% organic growth excluding COVID-19 related sales. This growth was attributed to the strong adoption of Abbott’s Alinity family of diagnostics systems.
Encouraged by the strong first-half performance, Abbott raised its full-year earnings per share (EPS) guidance.
“We achieved another quarter of strong growth in our underlying base business,” Abbott CEO Robert B. Ford said in a statement. “We have a lot of positive momentum heading into the second half of the year and are raising our full-year guidance.
Encouraged by the strong first-half performance, Abbott now anticipates a GAAP EPS of $3.30 to $3.40 and an adjusted EPS of $4.61 to $4.71 for the entire year. These revised earnings projections reflect an upward adjustment compared to the company’s previous guidance provided during Q1 2024 (at that time, Abbott projected full-year diluted EPS on a GAAP basis of $3.25 to $3.40 and adjusted diluted EPS of $4.55 to $4.70). Furthermore, Abbott narrowed its full-year organic sales growth guidance to a range of 9.5% to 10%, indicating a positive outlook for the remainder of the year.
Abbott’s strategic focus on innovation and expansion into high-growth areas, coupled with its diversified portfolio, has positioned the company for continued success. Recent product approvals and launches, such as the Esprit BTK system and new continuous glucose monitoring systems, are expected to contribute significantly to future growth.
