BY
TOM MURPHY AP HEALTH WRITER JULY
18, 2019 10:59 AM, UPDATED JULY 18, 2019 11:00 AM
This July 12, 2019, photo shows the
UnitedHealthcare headquarters in Minneapolis. UnitedHealthcare Inc. reports
earnings Thursday, July 18, 2019. JIM
MONE AP PHOTO
UnitedHealth raised
profit expectations for the year after second-quarter earnings climbed almost
13%, and the nation's largest health insurer continued expanding beyond its
core business and into care delivery.
A nearly 12% jump in
revenue from the company's pharmacy benefit management operation helped
UnitedHealth beat Wall Street expectations for the recently completed quarter.
UnitedHealth's OptumRx business added more customers and moved deeper into
specialty services like the infusion of drugs at patient homes.
UnitedHealth runs one of
the nation's largest pharmacy benefit managers in OptumRx, which is part of an
Optum business segment that also manages physician offices and surgery centers
and provides technology support. Total operating earnings from Optum, which is
more profitable than the company's health insurance business, rose 14% to $2.1 billion
in the quarter.
Earnings from the
still-larger health insurance side also grew 12%, helped by gains from the
company's Medicare and retirement business.
Jefferies analyst David
Windley said in a research note that "impressive" control of selling,
general and administrative expenses also aided the health insurance side.
Overall, UnitedHealth
earned $3.29 billion in the quarter. Earnings adjusted for one-time events
totaled $3.60 per share, which is 14 cents better than expected, according to a
survey by Zacks Investment Research.
Revenue grew 8% to $60.6
billion, about in line with estimates.
UnitedHealth Group Inc.,
based in Minnetonka, Minnesota, raised its full year, earnings expectations
Thursday to between $14.70 and $14.90 per share from a forecast for $14.50 to
$14.75 that it made in April.
Analysts expect full-year
earnings of $14.70 per share, according to FactSet.
UnitedHealth's insurance
business covers nearly 50 million people internationally and still brings in
most of the company's revenue. But UnitedHealth also has been feeding Optum
with acquisitions as the company adjusts to a big shift in how care is
delivered and covered.
Insurers and employers
that provide coverage are pushing deeper into managing or providing patient
care in order to cut costs and make sure people are getting good care. They're
focusing more on maintaining health, especially for patients with chronic
conditions, instead of waiting to pay claims once someone becomes sick.
More than a year ago,
UnitedHealth announced a $5 billion deal to buy DaVita Medical Group and its
hundreds of clinics. The company finally completed that deal in June, too late
to have much of an impact on the quarter.
Shares of UnitedHealth, a
component of the Dow Jones Industrial Average, slid 2% to $261.44 late Thursday
morning, while the Dow fell slightly.
The stock has had an
uncharacteristically bumpy journey this year. It slumped earlier this year amid
worries about government scrutiny of drug pricing and Democratic presidential
candidate calls for a "Medicare for All" plan that could replace
private coverage. But shares rallied this month after President Donald Trump
ended a plan to change how rebates for prescription drugs are administered.
With sentiment on managed
care companies still cautious, UnitedHealth's second quarter results should be
seen as satisfactory, said Windley, the Jefferies analyst.
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