Healthcare ETFs In Focus On UnitedHealth's Q2 Earnings

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The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported mixed second-quarter 2019 results. The company breezed past the Zacks Consensus Estimate on earnings but lagged on revenues. It raised its full-year forecast.

Earnings per share came in at $3.60, well above the Zacks Consensus Estimate of $3.46 and 15% higher than the year-ago quarter. Revenues rose 8% year over year to $60.6 billion, falling slightly short of the estimated $60.7 billion. The year-over-year performance was driven by double-digit percentage revenue growth at UnitedHealthcare Medicare & Retirement, OptumRx and OptumHealth.

The company increased its adjusted earnings per share guidance for 2019 to $14.70-$14.90 from $14.50-$14.75.

Despite the earnings beat and increased earnings per share guidance, UNH shares dropped 2.3% at the close of day. The stock currently has a Zacks Rank #4 (Sell) and a VGM Score of A. It belongs to a top-ranked Zacks industry (top 13%), which underscores its potential to outperform in the weeks ahead.

Given this, ETFs having the largest allocation to this health insurance giant are in focus. We have highlighted them in detail below:

iShares U.S. Healthcare Providers ETF (IHF - Free Report)

This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 47 securities in its basket and UNH occupies the top position with 22.9% share. The fund has amassed $980 million in its asset base, while volume is good at about 114,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares Evolved U.S. Healthcare Staples ETF (IEHS - Free Report)

This actively managed ETF employs data science techniques to identify companies with exposure to the health care staples sector. It holds 160 stocks in its basket with UnitedHealth taking the top spot at 11.9%. The fund has accumulated $7.4 million in its asset base and sees meager volume of 3,000 shares. It charges 18 bps in annual fees.

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