UNH UnitedHealth Group Inc

By Anna Wilde Mathews and Kimberly Chin 

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 (October 17, 2018).

UnitedHealth Group Inc. raised its full-year earnings projection for 2018 and offered reassurance about its early outlook for next year, as the company pointed to growth drivers including the continuing expansion of private Medicare plans.

UnitedHealth said Tuesday it expects to earn $12.80 a share on an adjusted basis this year, compared with the range of $12.50 to $12.75 a share it previously suggested.

UnitedHealth Chief Executive David Wichmann said on a conference call with analysts and investors that for next year, analysts' consensus projection "captures our 2019 outlook within a typically sized range," and he said that longer term, the company expects its performance to reflect its goal of 13% to 16% earnings growth.

"We have a lot of tailwinds, and they surpass our headwinds," he said.

Analysts said in research notes that the 2019 consensus estimate reflects earnings-per-share growth of around 13%.

UnitedHealth, the parent of the nation's largest health insurer as well as Optum, its growing health-services arm, said net income in the third quarter rose 28% from a year earlier to $3.19 billion, or $3.24 a share.

UnitedHealth's adjusted profit, which excludes acquisition-related intangible amortization and other items, rose to $3.41 a share. Analysts polled by Refinitiv expected the company to earn $3.29 a share on an adjusted basis.

Revenue rose 12% to $56.56 billion; analysts had expected $56.34 billion. Revenue from its UnitedHealthcare segment grew 13% while sales from its Optum health-services arm grew 11%.

UnitedHealth slightly beat projections for its medical-loss ratio, or the share of premiums spent on health-care costs, in its third-quarter results. Analysts at J.P. Morgan had written in an early-morning note that "consensus expectations were slightly nervous" for UnitedHealth because it had fallen slightly short of some analysts' expectations with its second-quarter MLR.

John Rex, UnitedHealth's chief financial officer, linked the company's MLR performance to a pharmacy and hospital inpatient spending growth trend coming at the low end of projections.

UnitedHealth also said it retains its optimistic view about the Medicare Advantage business, an important source of growth for the company and the broader managed-care sector. The company said it was expecting very strong expansion and was pleased with its position as the 2019 open-enrollment season gets under way.

When asked about the future role of pharmacy-benefit managers, amid questions about industry practices including its handling of rebates obtained from drugmakers, UnitedHealth executives said they see a continued important role, even if the industry's approach evolves.

The company also said it is positioning its PBM as a provider of an array of pharmacy services, including through its recent acquisition of two specialty pharmacy operators that it said will bolster offerings in behavioral health and oncology.

Shares in UnitedHealth, which have gained 18% this year, rose 3.93% in midday trading on the New York Stock Exchange.

Write to Anna Wilde Mathews at anna.mathews@wsj.com and Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

October 17, 2018 02:47 ET (06:47 GMT)

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