UnitedHealth Group Beats 3Q Forecast As Earnings Soar 26 Percent
MINNEAPOLIS (AP) -- UnitedHealth Group's third-quarter earnings soared 26 percent to beat Wall Street expectations as the nation's largest health insurer sold more coverage to retirees and continued to grow its business outside insurance.
The insurer said Tuesday it gained nearly 1 million more customers compared to last year's quarter, largely due to growth in its Medicare and retirement business. UnitedHealth is the nation's largest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people.
That gain more than countered a revenue hit the insurer took from the deferral of an insurance tax and the company's decision to scale back its presence on the Affordable Care Act's insurance marketplaces after booking big losses.
Operating earnings grew 14 percent to $2.4 billion for the company's main business, health insurance, as total enrollment topped 49 million people. But its Optum segment also saw earnings increase to $1.7 billion.
Optum provides pharmacy benefits management and technology services and also operates clinics and doctor's offices.
Overall, the Minnetonka, Minnesota, company earned nearly $2.49 billion as revenue grew 9 percent to $50.32 billion. Adjusted earnings totaled $2.66 per share.
Analysts expected earnings of $2.56 per share on $50.35 billion in revenue, according to FactSet.
UnitedHealth Group Inc. also said Tuesday that it expects 2017 earnings to approach $10 per share. That's up from a forecast it made in July for between $9.75 and $9.90 per share.
Analysts expect $9.86 per share.
UnitedHealth is the first health insurer to announce earnings every quarter. Many analysts and investors see it as a bellwether for other health insurers.
UnitedHealth shares climbed nearly $3 to $196 in premarket trading Tuesday.
Overall, UnitedHealth's shares have risen about 20 percent so far this year, outpacing the Standard & Poor's 500 index gain of around 14 percent. The insurer's stock topped $200 for the first time ever last month.
UnitedHealth shares, like the stock of other insurers, slipped briefly last week after President Donald Trump announced an executive order that could disrupt health insurance markets. The White House wants to make it easier for groups of employers to sponsor coverage that can be marketed or sold across state lines.
That order may make it easier to sell coverage with scaled-down benefits compared to what is required under the Affordable Care Act.
That could be "modestly favorable" to UnitedHealth, Leerink analyst Ana Gupte said in a research note.
Trump also announced plans to cut payments that reimburse insurers for some coverage they sell to people with lower incomes on the exchanges, where UnitedHealth has a limited exposure.
Tuesday's report is the first for David Wichmann as the company's new CEO. The former UnitedHealth president took over for Stephen Hemsley on Sept. 1. Hemsley had served as CEO since 2006 and became executive chairman of the company's board.
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