UnitedHealth Group's (UNH -0.82%) plunge of more than 30% earlier this year is practically all but forgotten. The health insurance stock delivered an impressive rebound over the last four months as the overall stock market bounced back.

That momentum was put to the test, though, as UnitedHealth Group announced its second-quarter results before the market opened on Wednesday. Here are the highlights from the company's Q2 update.

Man filing out health information papers with a woman smiling across from him

Image source: Getty Images.

By the numbers

UnitedHealth Group reported revenue in the second quarter of $62.1 billion, up 2.5% year over year. The consensus among Wall Street analysts projected Q2 revenue of $63.43 billion.

The company announced net income in the second quarter of $6.7 billion, or $6.91 per share, based on generally accepted accounting principles (GAAP). This reflected a big improvement over GAAP earnings of $3.4 billion, or $3.42 per share, reported in the prior-year period.

UnitedHealth Group posted adjusted net income in the second quarter of $7.12 per share. This result nearly doubled the adjusted earnings of $3.60 per share from the same quarter of 2019. It also trounced the average analysts' adjusted earnings estimate of $5.18 per share.

Behind the numbers

The COVID-19 pandemic impacted UnitedHealth Group both positively and negatively in the second quarter.

On the negative side, the company's revenue growth was dampened in a couple of ways. Commercial revenue for the UnitedHealthcare segment came in lower than it would have normally due to member attrition resulting from the economic impact of the pandemic. Optum's businesses were also affected early in the second quarter as care delivery services revenue fell.

However, UnitedHealth Group still delivered modest revenue growth despite these headwinds. UnitedHealthcare's public-sector and senior programs revenue rose 7% year over year. OptumHealth also served as a key growth driver, with 2 million more members served compared to the prior-year period and a 25% year-over-year increase in revenue per customer.

The primary positive impact from the pandemic for UnitedHealth Group in Q2, though, was its strong earnings growth. As medical care was deferred, the company's risk-based businesses' expenses fell significantly. The company's medical care ratio, which measures medical costs as a percentage of premium revenue, plunged to 70.2% in Q2 from 83.1% in the prior-year period. 

Don't expect these conditions to last long. UnitedHealth Group fully expects its medical care ratio and overall expenses will rise over the next several quarters as individuals obtain medical care that was delayed during the coronavirus-related lockdowns.

Looking ahead

UnitedHealth Group maintained its full-year 2020 earnings outlook. The company still expects GAAP earnings per share will be between $15.45 and $15.75 per share with adjusted earnings between $16.25 and $16.55 per share.

The healthcare stock could fall yet again if there's a severe second wave of COVID-19 outbreaks in the fall. If that doesn't happen, though, UnitedHealth Group's revenue growth should accelerate in the second half of 2020 while its earnings will decline from the temporary boost in the second quarter.