JAN 16, 2018 @ 09:31 AM
Opinions expressed by Forbes Contributors are their own.
UnitedHealth Group, already growing rapidly from health insurance
and its Optum health services unit, will see a boost of another $1.7 billion
thanks to the Republican-led tax cut package passed and signed into law a month
ago by President Trump.
“Corporate Tax Reform is expected to
improve earnings and cash flows by $1.7 billion in 2018,” UnitedHealth Group CEO David Wichmann told analysts Tuesday
morning.
The $1.5 trillion tax cut passed by the Republican led Congress
and signed into law last month by President Donald Trump has ushered in a
windfall for U.S. corporations to raise their financial forecasts for this
year. Some are expected to use the cash for acquisitions and a few are offering
worker bonuses.
In UnitedHealth’s case, the nation's largest health insurer plans
to invest “increased cash flows to better fulfill our mission and, in turn, to
grow and diversify our enterprise,” Wichmann said. UnitedHealth said it will
accelerate investments in "data analytics, technology and innovations to
better serve consumers and care systems to advancing new and existing business
platforms."
Due to the tax benefits, UnitedHealth revised its financial
outlook upward, according to its fourth quarter 2017 and full year
earnings report. The company now expects 2018 adjusted earnings of
between $12.30 and $12.60 per share. That’s better than an earlier forecast of
$10.55 to $10.85.
UnitedHealth executives say they will accelerate their strategy to
grow all their business such as Optum, which has been buying up doctor
practices, surgery centers and other outpatient services. UnitedHealth is also
expanding in South America following recent acquisitions that will continue.
Even before Trump’s Tax Cuts and Jobs Act of 2017, UnitedHealth
Group has been on a roll. The company for the first time eclipsed $200 billion
in annual revenue with total revenue last year growing 9% to $201
billion. Full year 2017 UnitedHealth earnings
jumped by 17.6%, or $2.3 billion, to $15.2 billion.
UnitedHealth is seeing growth across the board in its insurance
businesses including Medicaid coverage for poor Americans and Medicare
Advantage, the popular coverage private insurers provide to seniors in contract
with the federal government.
UnitedHealthcare’s Medicare and retirement business grew by 12% to
serve more than 9 million people in 2017.
UnitedHealth continues to benefit from its Optum segment, which
generated double-digit percentage earnings growth across all product and
service lines in the fourth quarter and throughout 2017. Optum provides
pharmacy benefits management and technology services and also operates clinics
and doctor's offices.
"2017 earnings from operations grew by nearly $1.1 billion,
or 19 percent, with individual
businesses’ earnings growth rates ranging from 16 percent to 28
percent," Renfro told analysts. "We again balanced innovation
investments in our businesses and strategic acquisitions with business
simplification and focused cost management."
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