UnitedHealth Profit Rises Despite ACA-Related Costs -- Update
October 17 2017 - 10:24AM
Dow Jones News
By Allison Prang
UnitedHealth Group Inc.'s core insurance and health-services
businesses grew in its latest quarter, despite a dent in revenue
caused by the company's decision to pull out of most Affordable
Care Act markets.
The latest quarterly results from the nation's largest health
insurer come as the market has been roiled by policy changes in
Washington, D.C. to the ACA. President Donald Trump last week
signed an executive order seeking to provide lower-cost plans in
the individual insurance market, and he is poised to end payments
to insurers that offset subsidies to low-income consumers.
Guiding the company through the shifting landscape is David
Wichmann, the former UnitedHealth president who took the reins as
chief executive Sept. 1. Former CEO Stephen Hemsley now serves as
executive chairman.
UnitedHealth also said Tuesday it expects 2017 earnings on an
adjusted per-share basis to "approach" $10, up from its prior
forecast of $9.75 to $9.90.
Shares were up 4.92% in early-morning trading. They are up 21%
year to date.
UnitedHealth has grown in recent months after it bought Surgical
Care Affiliates Inc. and confirmed last month it was exploring the
purchase of Banmedica, a health-care company in Chile, in what
analysts estimate could be a $2.8 billion deal.
The Advisory Board Co. recently announced it was selling its
health care business to Optum, UnitedHealth's health-services
business, in a deal that is expected to close at the end of this
year or early next year.
Revenue from the Optum business increased 8.4% to $22.9 billion
in the latest quarter, compared with $21.1 billion in the same
period last year. The division's operating margin expanded to 7.4%,
from 6.9% a year ago. Revenue at OptumRx, the division's
prescription business, increased 4.7% to $16 billion. Expansion in
delivery of care drove a 21% increase in revenue from the
division's OptumHealth business, to $5.3 billion.
Revenue from the UnitedHealthcare insurance business grew 9.6%
from a year earlier to $40.7 billion, driven by increased
enrollment in employer-sponsored plans, as well as Medicare,
Medicaid and international programs.
Overall, UnitedHealth reported adjusted net earnings of $2.6
billion, or $2.66 per share, compared with $2.1 billion this time
last year. Analysts were predicting $2.56 per share.
Revenue rose 8.7% to $50.3 billion, but consolidated revenue
took a $1.6 billion-dollar hit from ACA-related factors, including
the withdrawal from markets and a health-insurance tax
deferral.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
October 17, 2017 10:09 ET (14:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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