The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Universal American missed estimates on revenue and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share shrank to a loss.
Gross margin increased, operating margin improved, and net margin dropped.
Universal American reported revenue of $528.9 million. The five analysts polled by S&P Capital IQ looked for revenue of $564.7 million on the same basis. GAAP reported sales were 40% lower than the prior-year quarter's $875.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.13. The seven earnings estimates compiled by S&P Capital IQ predicted $0.02 per share on the same basis. GAAP EPS were -$0.25 for Q4 compared to $1.32 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 20.3%, 670 basis points better than the prior-year quarter. Operating margin was 3.2%, 480 basis points better than the prior-year quarter. Net margin was -3.8%, 1,570 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $533.0 million. On the bottom line, the average EPS estimate is $0.10.
Next year's average estimate for revenue is $2.27 billion. The average EPS estimate is $0.57.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 63 members out of 69 rating the stock outperform, and six members rating it underperform. Among 27 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 26 give Universal American a green thumbs-up, and one gives it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Universal American is outperform, with an average price target of $13.17.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.