UnitedHealth's 2Q Profit Climbs 13 Percent
INDIANAPOLIS (AP) -- UnitedHealth Group Inc. said Tuesday its second-quarter earnings rose 13 percent, as enrollment gains helped fuel revenue growth and consumers continued to moderate their health care system use.
The Minnetonka, Minn., insurer also hiked its 2011 profit forecast by 20 cents per share after raising it in the first quarter as well.
UnitedHealth's enrollment grew 5 percent to 34.2 million compared to last year's second quarter, led by gains in commercial coverage, which includes employer-sponsored and individual plans. That contributed to an 8 percent jump in revenue from UnitedHealthcare, the company's largest segment.
Revenue also swelled 19 percent to $7 billion for UnitedHealth's Optum segment, which offers health management, consulting and pharmacy services.
Health care use that has climbed at a slower rate than insurers expected when they set premiums has helped the industry in recent quarters, and UnitedHealth said it continues to benefit from that. Insurers have said they expected health care use to return to normal levels later this year, but some analysts disagree.
They say the slumping economy has helped rein in use, and health plans that make patients more aware of the cost of care also may be having an impact.
UnitedHealth earned $1.27 billion, or $1.16 per share, in the three months that ended June 30. That's up from $1.12 billion, or 99 cents per share, in the same quarter last year. Revenue rose 8 percent to $25.23 billion.
Analysts surveyed by FactSet forecast earnings of 91 cents per share on $25.22 billion in revenue.
The insurer saw a $180 million gain in the quarter because claims left over from prior quarters came in lower than expected. UnitedHealth said that, plus the moderated health care use, helped offset estimated rebates it will have to pay under a health care overhaul rule that started this year.
The overhaul requires insurers to spend a minimum percentage of their premiums on medical claims and quality improvements or issue rebates to consumers. The goal behind the law is to ensure that a fair share of the premiums an insurer collects goes toward care and not profits or big salaries. Its impact on the sector has been muted so far.
UnitedHealth now expects 2011 earnings of $4.15 to $4.25 per share, up from its forecast in April for earnings of $3.95 to $4.05 per share. It expects $101 billion in revenue.
Analysts forecast earnings of $4.21 per share on $101.49 billion in revenue
Goldman Sachs analyst Matthew Borsch said in a research note UnitedHealth reported a strong, but not "outsized," second quarter, and the performance should bode well for the rest of the managed care sector.
UnitedHealth is the largest publicly traded health insurer based on total revenue and the second-largest based on enrollment, trailing only WellPoint Inc. WellPoint and Aetna Inc. will report their second-quarter numbers July 27. Humana Inc. follows on Aug. 1, and Cigna Corp. rounds out the largest health insurers when it reports earnings Aug. 4.
UnitedHealth shares dipped 41 cents to $51.54 in premarket trading.
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