Franklin, Tenn.-based Medicare advantage insurer Clover Health Investments Corp.’s (CLOV - Get Rating) total revenues grew 159.9% year-over-year to $432.04 million in the fiscal fourth quarter, ended Dec. 31, 2021. However, its operating loss increased 176.2% year-over-year to $186.79 million, while its net loss increased 48.1% year-over-year to $187.20 million. Furthermore, CLOV’s trailing-12-month gross profit margin and EBITDA margin are currently both negative, versus the 56.24% and 5.83% respective industry averages. Over the past year, the stock has declined 80.2% in price to close yesterday’s trading session at $2.01. Given its weak financials, we think the stock could witness further declines in the near term.

However, the healthcare-plans industry has performed well throughout the pandemic. With rising health awareness and increasing chronic diseases, the industry should witness steady growth. The global health insurance market is expected to grow at a 5.5% CAGR to $3,038.6 billion in 2028.

Therefore, we think investors looking to benefit from the healthcare plans industry’s growth could instead invest in quality stocks UnitedHealth Group Incorporated (UNH - Get Rating), Anthem, Inc. (ANTM), Cigna Corporation (CI - Get Rating), and Humana Inc. (HUM - Get Rating).

Click here to checkout our Healthcare Sector Report for 2022

UnitedHealth Group Incorporated (UNH - Get Rating)

UNH in Minnetonka, Minn., operates as a diversified health care company in the United States. It has four segments: UnitedHealthcare; Optum Health; Optum Insight; and Optum Rx. Its mission is to help people live healthier lives and help make the health system work better for everyone.

On Jan. 19, 2022, Andrew Witty, CEO, UNH, said, “Our strong 2021 performance and confident growth outlook for 2022 and beyond reflect the accelerating innovation and expanding capabilities across Optum and UnitedHealthcare.”

UNH’s total revenues came in at $73.74 billion, up 12.6% year-over-year for the fourth quarter, ended Dec. 31, 2021. Its net earnings increased 78.2% year-over-year to $4.19 billion, while its adjusted EPS was $4.48, up 77.8% year-over-year.

For its fiscal year 2022, UNH’s revenue is expected to grow 11.1% year-over-year to $319.54 billion. Its EPS is also estimated to grow 14.2% to $24.7 in 2023. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 39.5% in price to close yesterday’s trading session at $459.62.

UNH has an overall A rating, representing a Strong Buy in our POWR Ratings system. It has an A grade for Stability and a B grade for Sentiment and Quality. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

UNH is ranked #2 of 11 stocks in the B-Rated Medical – Health Insurance industry. Click here to see the additional POWR Ratings for UNH (Value, Momentum, and Growth).

Anthem, Inc. (ANTM)

ANTM, through its subsidiaries, operates as a health benefits company in the United States. It operates through four segments: Commercial & Specialty Business; Government Business; IngenioRx; and Other. ANTM is headquartered in Indianapolis, Ind.

On Jan. 26, 2022, Gail K. Boudreaux, President, and CEO, said, “We begin 2022 with ongoing momentum across all our businesses, and we’re confident in our ability to deliver earnings growth consistent with our long-term targeted range as we innovate for consumers and advance our digital platform for health.”

For the fiscal fourth quarter, ended Dec. 31, 2021, ANTM’s total operating revenue came in at $36.02 billion, up 14.2% year-over-year. Its net income was $1.13 billion, up 104.2% year-over-year, while its EPS increased 111.4% year-over-year to $4.63.

Analysts expect ANTM’s revenue to grow 11.6% to $152.89 billion in 2022. Its EPS is estimated to grow 13.2% to $32.24 in 2023. It surpassed EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 45.3% in price to close the last trading session at $442.53.

ANTM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

ANTM has a B grade for Growth, Value, Stability, Sentiment, and Quality. Click here to see the additional POWR Ratings for Momentum for ANTM. It is ranked #1 in the Medical – Health Insurance industry.

Cigna Corporation (CI - Get Rating)

Bloomfield, Conn.-based CI provides insurance and related products and services in the United States. Its segments are Evernorth; U.S. Medical; and International Markets. The company distributes its products and services through insurance brokers and consultants.

On Feb. 3, 2022, David M. Cordani, Chairman and CEO, said, “We performed well in 2021 as we supported the growing needs of our clients, customers, and patients. 2022 will be a year of growth across our franchise as we continue innovating and advancing our work to make health care more affordable, predictable, and simple.”

CI’s adjusted revenues came in at $45.68 billion, up 9.6% year-over-year for the fourth quarter, ended Dec. 31, 2021. Its adjusted income from operations came in at $1.57 billion, up 24.1% year-over-year, while its adjusted EPS increased 35.9% year-over-year to $4.77.

Analysts expect CI’s revenue to grow 5.1% to $188.40 billion in 2023. Its EPS is also estimated to rise 11.2% per annum for five years. It surpassed EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 5.8% in price to close yesterday’s session at $225.09.

CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

CI has a B grade for Growth and Value. Within the Medical – Health Insurance industry, it is ranked #5. Click here to see the additional POWR Ratings for CI’s Stability, Sentiment, Momentum, and Quality.

Humana Inc. (HUM - Get Rating)

Together with its subsidiaries, HUM in Louisville, Ky., operates as a health and well-being company in the United States. It operates through three segments: Retail, Group and Specialty, and Healthcare Services. 

On Feb. 2, 2022, Bruce D. Broussard, HUM’s President and CEO, said, “Looking ahead, we are confident in both the fundamentals of the Medicare Advantage industry and the long-term growth prospects for our company. We expect that improved membership growth, further penetration in our growing and maturing Healthcare Services businesses, and our increased focus on productivity improvements will position us to deliver on our long-term earnings target in 2023 and beyond.”

HUM’s total revenues came in at $21.05 billion, up 10.5% year-over-year for the fourth quarter, ended Dec. 31, 2021. Its net loss came in at $14 million, compared to $274 million in the prior period, while its loss per share was $0.11, compared to $2.07 in the year-ago period.

HUM’s revenue is expected to increase 10.8% to $92.41 billion in 2022. Its EPS is also estimated to increase 16.9% to $24.13 in 2022. It surpassed the EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 9.4% in price to close yesterday’s session at $413.76.

HUM has an overall B rating, which equates to a Buy in our POWR Ratings system. It has a B grade for Value and Sentiment. Click here to check additional ratings for HUM (Growth, Momentum, Stability, and Quality). HUM is ranked #1 of 28 stocks in the B-rated Insurance – Life industry.

Click here to checkout our Healthcare Sector Report for 2022

UNH shares fell $4.99 (-1.09%) in premarket trading Thursday. Year-to-date, UNH has declined -8.47%, versus a -11.16% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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