UnitedHealth Group Inc.’s UNH fourth-quarter earnings are expected to benefit from increased number of individuals served across its government businesses.

The company is an industry leader and has been growing its enrollment consistently from past several quarters owing to its huge market share in each of the business line it operates.

Growth in Medical Membership: We expect medical membership growth in the to-be reported quarter to witness an increase in number of members served in its government business, partially offset by a decline in the international and commercial segments. The Zacks Consensus Estimate for medical membership is 49.3 million, up 1.4% year over year.

This growth in medical membership will be driven by:

Higher Enrollment in Public and Senior Markets: Government business, which primarily consists of Medicare and Medicaid, has been an area where UnitedHealth has invested tremendously in the recent years and intends to grow further. Currently, the government business is in huge demand. This is because of increasing baby boomer population, which has been a major contributor to membership growth.

Notably, membership in this line of business has secularly risen over the past several quarters. The upside was owing to its relation with AARP and increasing number of Medicare Advantage (MA) plans with 4 stars and the same is expected to continue in the fourth quarter as well. The Zacks Consensus Estimate for membership in the Government business is 15.4 million, up 11.7% year over year.

Medicare Membership to Grow: Strong membership growth in  MA business must have been led by a combination of premium and benefit stability, rising stars rating performance and improved service, and clinical performance and high retention rates in the fourth quarter. In fact, UnitedHealth’s distinctive product value and consumer experience have enabled it to increase market share in MA, which must have supported enrollment growth. The Zacks Consensus Estimate for membership in the MA business is 4.4 million, up 21.8% year over year.

Higher Medicaid Enrollment: Also, Medicaid enrollment must have gained from the company’s expansion into newer states, contract renewals as well as growth in higher acuity, special needs membership. Increased adoption of states to move Medicaid to managed care should have led the company to gain Medicaid market share. The Zacks Consensus Estimate for membership in the Medicaid business is 6.6 million, up 11.7% year over year.

Growth in enrollment will be partially offset by:

Lower Customers in International Business: However, membership from the company’s international operations that is primarily concentrated in Brazil is expected to remain under pressure due to macro-economic contraction in the private healthcare market.  The Zacks Consensus Estimate for membership in the International business is 4.1 million, down 3.3% year over year.

Decline in Commercial Enrollment: Furthermore, medical membership growth is likely to be partially offset by a decline in Commercial enrollment, which will be under pressure due to exit from individual exchange markets. The Zacks Consensus Estimate for membership in the Commercial business is 29.8 million, down 2.7% year over year.

UnitedHealth’s solid market share, growing Optum business, diversified premium revenue and disciplined capital management are also anticipated to aid overall earnings. (Read more:Robust Revenues to Drive UnitedHealth’s Q4 Earnings).

Zacks Rank and Stocks That Warrant a Look

UnitedHealth carries a Zacks Rank #3 (Hold). Here are a few companies worth considering with the right combination of elements to deliver an earnings beat this quarter:  

Centene Corp. CNC is expected to report fourth-quarter earnings performance on Feb 6. The company has an Earnings ESP of +0.58% and a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem Inc. ANTM has an Earnings ESP of +0.15% and a Zacks Rank #2 (Buy). The company is expected to release fourth-quarter earnings results on Jan 31.

athenahealth, Inc. ATHN has an Earnings ESP of +1.63% and a Zacks Rank #3. The company is expected to announce fourth-quarter earnings results on Feb 1.

Zacks Editor-in-Chief Goes “All In” on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
athenahealth, Inc. (ATHN): Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
Anthem, Inc. (ANTM): Free Stock Analysis Report
Centene Corporation (CNC): Free Stock Analysis Report
To read this article on Zacks.com click here.