Wednesday, April 15, 2020

So Far, UnitedHealth’s Earnings See ‘Minimal Impact’ From Coronavirus


Bruce Japsen Senior Contributor Apr 15, 2020,09:42am EDT
UnitedHealth Group reported ‘minimal impact’ to first quarter profits as elective procedures the large health insurer pays for were postponed amid the spread of the Coronavirus strain COVID-19.
UnitedHealth Group, which runs the health insurer UnitedHealthcare and the big provider of healthcare services Optum, reported profits from operations rose 3.4% to nearly $5 billion in the first quarter. Revenues rose nearly 7% to $64.4 billion “reflecting broad-based revenue growth across Optum and UnitedHealthcare,” the company said Wednesday.
Elective procedures are being postponed at hospitals across the country to free up inpatient capacity for patients sickened by COVID-19, which is expected to be a temporary benefit for health insurers like UnitedHealth.
UnitedHealth, however, is seeing some impact to its Optum health services business and higher usage of services that counter the reduced patient volume from elective procedures. Optum has provided care for more than 10,000 COVID-19 patients so far and is operating “more than 400 testing sites across the country,” executives said.
“Like the broader health system, in recent weeks we have seen a reduction in elective care, which is impacting both the UnitedHealthcare benefits and the Optum care delivery businesses,” UnitedHealth chief executive David Wichmann told analysts Wednesday morning on the company’s first quarter earnings call. “Most traditional procedural work has been postponed at our SCA ambulatory surgery centers. Likewise, the UnitedHealthcare and Optum at-risk care delivery businesses have seen lower demand for these services.”
The company said its UnitedHealthcare first quarter revenues increased 4.4% to $51 billion due largely to the insurer’s growth from new enrollees in Medicare Advantage, the private health insurance for seniors.
UnitedHealth’s strong Medicare Advantage growth comes amid unprecedented competition given a record number of health plans is participating in a program that offers seniors the same benefits as traditional Medicare plus extras like preventative care and outpatient healthcare services. UnitedHealth’s Medicare Advantage business competes against rivals in the health insurance business including Anthem, the Aetna unit of CVS Health, Cigna, Humana and Centene.
Meanwhile, Optum revenues grew more than 24% to $32.8 billion. Optum revenues include the pharmacy benefit manager OptumRx and an array of medical care provider businesses.
Looking ahead, UnitedHealth executives said they are shifting resources in the battle against COVID-19 and have not made any changes to the company’s financial outlook for 2020.
 “While it feels awkward to be talking about earnings outlooks in this moment, you saw in our press release we are maintaining the 2020 earnings per share outlook established at our investor conference,” Wichmann said. “We view this as the most reasonable baseline posture in these uncertain times as we continue to grow and operate our businesses while assessing the multitude of potentially offsetting factors across our uniquely diverse enterprise. These factors will become clearer in the months to come.”

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