UnitedHealth's Outlook Improves -- WSJ
April 18 2018 - 3:02AM
Dow Jones News
By Allison Prang
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 18, 2018).
UnitedHealth Group Inc. posted a 31% increase in profit for its
latest quarter and raised its earnings outlook for the year.
UnitedHealth, the parent of the biggest U.S. health insurer, on
Tuesday reported a first-quarter profit of $2.84 billion, or $2.87
a share, up from $2.17 billion, or $2.23 a share, a year earlier.
The company earned $3.04 a share on an adjusted basis, compared
with $2.37 a share.
Revenue rose 13% to $55.19 billion, helped by double-digit
percentage increases in the company's health-insurance and Optum
health-services segments.
Analysts polled by Thomson Reuters were expecting adjusted
earnings of $2.89 a share. They expected revenue of $54.86
billion.
This year UnitedHealth expects a per-share profit of between
$11.70 and $11.95, or between $12.40 and $12.65 on an adjusted
basis.
Analysts expect adjusted earnings of $12.54 a share.
Shares in UnitedHealth were 3.6% higher at $238.54 on Tuesday
afternoon. The stock is up 44% over the past 12 months.
UnitedHealth had expected the recent new tax law to help
earnings by about 16% for the year and increase its cash flow by
about $1.7 billion.
The company said its income-tax rate in its most recent quarter
was 21.5%.
Revenue from premiums rose 13% -- in line with the company's
overall increase in revenue -- to $44.08 billion. Total operating
costs at the company increased 13% to $51.14 billion.
While investors had feared that flu trends early in the quarter
could hurt earnings, the impact didn't drag down results.
UnitedHealth finance chief John Rex said the company's growing
diversity can help balance out the impact from costs of the U.S.
winter flu season for its domestic health-insurance business.
Earnings from Optum operations rose 29%, outpacing growth from
the health-insurance business.
UnitedHealth reached a deal in December to acquire DaVita Inc.'s
physician group for $4.9 billion in cash. Those plans hit a bump
last month when the Federal Trade Commission asked for more
information about the deal.
Optum has been building up its roster of physician practices,
clinics and surgery centers with years of mostly under-the-radar
acquisitions, and DaVita's group represents its highest-profile
deal so far in the doctor business.
Chief Executive David Wichmann said UnitedHealth has continued
to acquire health-care providers at a "prettyconsistent pace," and
said the company is investing in technology through its new Optum
Ventures arm. Noting the company's acquisition of South American
health-care firm Banmédica SA, he said UnitedHealth is making
"measured investments" in overseas assets.
"We're looking to add market presence and capability across our
business, and you can expect us still to be very strong deployers
of capital," while maintaining a strong balance sheet, he said.
Anna Wilde Mathews contributed to this article.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
April 18, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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