UnitedHealth sees strong revenue growth and ups outlook for
2019.
BY TOM MURPHY, AP Health
Writer
UnitedHealth
Group raised its 2019 forecast and detailed another better-than-expected
quarter Tuesday, but shares soared after company leaders mentioned next year's
growth prospects.
CEO
David Wichmann told analysts it would be "reasonable and prudent" for
them to set initial expectations for core operating performance at the lower
end of UnitedHealth's long-term goal of 13% to 16% growth annually.
That's
slightly higher than average expectations on Wall Street, according to FactSet.
Company
shares rose more than 7% in midday trading, erasing most of the 11% price drop
they had seen so far in 2019.
The
nation's largest health insurance provider typically starts its annual
forecasts conservatively and won't discuss expectations again until its annual
investor conference in December. Even so, Wichmann's comments helped juice a
sector of stocks that has lagged this year while broader indexes like the Dow
Jones Industrial Average have climbed around 15%.
Shares
of other health insurers and pharmacy benefit managers like Anthem Inc. and
Cigna Corp. also jumped in Tuesday trading.
Those
stocks have bounced around this year, as some Democratic presidential
candidates have renewed a push for a "Medicare for All " plan that
could replace private coverage and as Congressional committees investigated
soaring drug costs .
UnitedHealth
Group Inc. provides health insurance for more than 49 million people and also
runs one of the nation's biggest pharmacy benefit management businesses through
its Optum segment.
Operating
earnings from Optum jumped 20% in the company's third quarter to $2.4 billion,
while the company's bigger health insurance side saw 4% growth to $2.7 billion.
Optum
also runs clinics and surgery centers as part of the company's push to get more
involved in care. In June, UnitedHealth completed a $5 billion deal to buy
hundreds of DaVita Medical Group clinics, and that helped revenue grow in the
third quarter.
Overall
the insurer's earnings jumped 11% in the quarter to $3.54 billion. Earnings,
adjusted for one-time gains and costs, were $3.88 per share, which is 8 cents
better than Wall Street was expecting, according to Zacks Investment Research.
Total
revenue grew about 7% to $60.35 billion, also topping projections.
Medical
costs, by far the company's largest expense, grew 8% compared to last year's
quarter and topped $39 billion, but UnitedHealth said that trend remained
within expectations.
Minnetonka, Minnesota-based
UnitedHealth Group Inc. said Tuesday that it now expects full-year earnings of
between $14.90 and $15 per share after previously raising its forecast in July.
Analysts
expect earnings of $14.83 per share, according to FactSet.
Follow
Tom Murphy on Twitter: @thpmurphy
Elements
of this story were generated by Automated Insights
(http://automatedinsights.com/ap) using data from Zacks Investment Research. Access
a Zacks stock report on UNH at https://www.zacks.com/ap/UNH
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2019 The Associated Press.
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