UnitedHealth Tops Views, Boosts Outlook--Update
October 18 2016 - 11:11AM
Dow Jones News
By Joshua Jamerson and Anna Wilde Mathews
UnitedHealth Group Inc. boosted its earnings outlook for the
year as it posted strong profit growth in the latest quarter on
climbing revenue across its segments.
The Minnetonka, Minn., company now expects adjusted earnings for
the year of about $8 a share compared with its previous forecast of
$7.80 to $7.95 a share.
The health-care delivery businesses drove growth at Optum, its
health-services unit, where revenue rose 9% to $21.1 billion. Optum
is rapidly expanding its business of providing primary care -- the
company has said it aims to have a "national platform," with owned
or affiliated clinics in more than 75 major markets around the U.S.
Optum has also benefited from UnitedHealth's acquisition of
pharmacy-benefit manager Catamaran Corp., which was completed in
July 2015.
Meanwhile, the insurer's medical-loss ratio -- the percentage of
premiums paid in claims -- decreased 60 basis points year-over-year
to 80.3% in the third quarter.
UnitedHealth said revenue from its employer-based and individual
plans rose 12% to $13.3 billion in the period. It said growth from
employer-sponsored groups offset decreases in individual benefit
coverage.
The company said its losses on Affordable Care Act plans totaled
around $200 million in the third quarter, about $120 million of
which were offset by a previously-created premium deficiency
reserve and $80 million of which impacted its third quarter
results. At the end of the third quarter it had about 770,000 ACA
exchange enrollees and 210,000 people who bought ACA plans outside
of one of the law's exchanges.
UnitedHealth has said it would withdraw from nearly all of the
health-law marketplaces next year, and previously said it
anticipates losing about $850 million on ACA plans this year.
The largest U.S. health insurer and the first to report
earnings, UnitedHealth is typically viewed as a bellwether for the
industry. It offered reassurance on medical spending, saying the
trend in its commercial business was "solidly in line" with its
projection of 6% plus or minus 50 basis points.
Over all, UnitedHealth reported a profit of $1.97 billion, or
$2.03 a share, for the third quarter of 2016, up from $1.6 billion,
or $1.65, a year earlier. Excluding certain items, earnings rose to
$2.17 a share from $1.77.
Revenue climbed 12% to $46.29 billion. Analysts had projected
adjusted earnings of $2.08 a share on revenue of $46.09 billion,
according to Thomson Reuters.
UnitedHealth also gave a limited preview of next year, saying
was "comfortable" with analysts' 2017 earnings projections. Chief
Executive Stephen J. Hemsley said the company intended to offer
"positive body language" about next year, while reserving details
until its investor day in late November.
Shares in the company climbed 7.2% to $143.77 and are now up 22%
so far this year.
Write to Joshua Jamerson at joshua.jamerson@wsj.com and Anna
Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
October 18, 2016 11:56 ET (15:56 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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