Yahoo Finance Live anchors discuss the decline in stock for UnitedHealth following fourth-quarter earnings.

Video Transcript

BRIAN SOZZI: Welcome back. Let's take a look at what's trending on the Yahoo Finance platform this morning. It started with UnitedHealth, following an earnings beat on the top and bottom lines for the fourth quarter as revenue grew 12% year over year. And guys, another quarter from United Health, another very good one. You had net margins up about 30 basis points year over year. Sales up, like I just mentioned, close to 12%. Overall, a good year for this company, a year where they saw sales up 19%. Pretty impressive.

BRAD SMITH: Yeah, solid cash flows from the operation there. You saw that coming in at about $26.2 billion. I mean, this year is one where for healthcare, or at least, coming off of last year, there's a larger question of how much that tailwind that they could write off of people leveraging some of their healthcare and insurance plans and opting into either some of the procedures that they had had to put off, or just making sure that they were getting the regular checkups that perhaps were part of routine prior to the pandemic, I think that's exactly where UnitedHealth and some of the other insurance plays have been able to benefit over that period of time as well.

JULIE HYMAN: Yeah, as always, with UnitedHealth or any of the big insurers, the key number to watch is the so-called medical loss ratio. That is UnitedHealth takes in lots and lots of premiums from its customers. The medical loss ratio is how much of those premiums go out the door in paying for stuff. 82.8% was the number in the fourth quarter that was in line with analyst estimates.

Now, UnitedHealth tends to be a consistent outperformer on this metric. But is it outperforming enough? In other words, just meeting estimates seems to be maybe one of the reasons why the stock is slipping here. What's interesting, though, is that UnitedHealth actually has down thus far in 2023. So it's interesting that even given that sort of underperformance-- it's down about 6 and 1/2%-- that it didn't do a little bit better in response to these numbers today.

BRAD SMITH: Yeah, and over the past kind of 52 weeks, it's been an interesting story between UnitedHealth and even some of the outperformers that were in the broader healthcare or even biotech landscape during 2022, and just a larger question of can that be repeated in 2023. I think for UnitedHealth, over that period of time, they were up, actually, over the past 52 weeks by about 6%.

So one of the few companies-- and you kind of take out or strip out energy, and then, additionally, some healthcare names, that were actually able to see a positive move over the course of the past 52 weeks, as many companies across other sectors saw some extreme headwinds on their share price valuations.

JULIE HYMAN: Yeah, and a lot of the investors we've been speaking to, healthcare is one of the areas they like for this year. Healthcare tends to be defensive in a down economy. You've got to get your medical care, right? So that's one of the theses behind that move.