Tom Murphy Associated Press May 2, 2019
UnitedHealth Group
beat first-quarter expectations and raised its 2019 forecast, as the nation's
largest insurer increased Medicare coverage
and received another boost from its growing business outside health insurance.
The
performance softened, at least temporarily, an unusual stock price slump so far
this year.
UnitedHealth
said Tuesday that revenue from its Medicare and retirement business jumped
nearly 12%, as Medicare Advantage enrollment grew by around 400,000 people.
UnitedHealth is the nation's largest provider of Medicare Advantage plans,
which are privately run versions of the federally funded Medicare coverage
program for people over age 65.
UnitedHealth
Group, based in Minnetonka, Minn., also saw revenue grow nearly 12% to $26.4
billion from its Optum segment, which runs a pharmacy benefit management
business, manages physician clinics and provides technology services.
UnitedHealth
covers nearly 50 million people internationally as the largest U.S. health
insurer, but it also has been stoking growth in its Optum segment for several
years now. Health insurance is still the biggest revenue generator for
UnitedHealth, but Optum, which generated first-quarter operating earnings of
$1.9 billion, generally delivers a higher profit margin.
UnitedHealth
has been feeding Optum with acquisitions as insurers and other health care entities
push deeper into managing or providing patient care in order to cut costs and
improve quality.
Overall,
UnitedHealth earnings jumped 22% to $3.47 billion in the first quarter.
Earnings, adjusted for amortization costs, were $3.73 per share, topping Wall
Street estimates by 13 cents, according to a survey by Zacks Investment
Research.
Total
revenue climbed about 9% to $60.31 billion, also edging out expectations.
UnitedHealth
now expects 2019 adjusted earnings to range between $14.50 and $14.75 per share
after reaffirming in January a forecast for $14.40 to $14.70 per share.
Analysts
expect, on average, earnings of $14.65 per share, according to FactSet.
Shares
of UnitedHealth, a component of the Dow Jones industrial average, jumped 2% to
$235 before markets opened Tuesday. UnitedHealth shares had slumped 7% so far
this year after reaching a new all-time high price of nearly $288 late last
year.
The
Dow, in contrast, has climbed 13% in 2019.
UnitedHealth
and other insurers saw their stocks drop earlier this year after "Medicare
for All" legislation was introduced in Congress.
Pharmacy
benefit managers, which run prescription drug coverage, also have been called
before Congressional committees to testify about soaring drug prices.
UnitedHealth's OptumRx business
is one of the nation's largest pharmacy benefit managers.
Portions
of this story were generated by Automated Insights using
data from Zacks Investment Research.
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