UnitedHealth Lifts Profit Targets on Stronger Sales -- Update
July 18 2019 - 1:27PM
Dow Jones News
By Anna Wilde Mathews and Kimberly Chin
UnitedHealth Group Inc. boosted its 2019 earnings targets after
reporting a strong first half of the year, driven by broader sales
growth in premiums, products and services.
The parent of the nation's largest health insurer raised its
full-year earnings outlook to between $13.95 and $14.15 a share, up
from its previous forecast of $13.80 to $14.05 a share. Adjusted
earnings are expected to come in between $14.70 and $14.90 a share,
compared with earlier projections of $14.50 to $14.75 a share.
The company said profit for the second quarter climbed 13% from
a year earlier to $3.29 billion, or $3.42 a share. Analysts polled
by FactSet expected earnings of $3.28 a share.
UnitedHealth posted an adjusted profit of $3.60 a share, topping
analysts' estimates of $3.45 a share. Matthew Borsch, an analyst
with BMO Capital Markets, wrote in a note that the results beat the
projections largely due to nonoperating items, including higher
investment income.
The medical loss ratio for UnitedHealthcare, the insurance arm,
was 83.1%, which analysts said was in line with projections but
also benefited from prior period reserve development, essentially
the difference between money set aside for claims and the actual
costs. UnitedHealth executives said medical expenses had matched
their expectations, and the company said the number was increased
by the impact of a deferred health-insurance tax. The medical loss
ratio represents the share of premiums paid out in claims.
Overall revenue rose 8% to $60.60 billion from a year ago.
Analysts were looking for $60.55 billion. Revenue from the
UnitedHealthcare segment rose 6% to $48.59 billion and sales from
its Optum segment increased 13% to $28.03 billion.
During a call with analysts, UnitedHealth said it remains
committed to its plan to require drug rebates to be passed to
consumers in many cases, despite the Trump administration's
decision to pull back a proposal affecting rebates in Medicare.
Chief Executive David Wichmann said the company's rebate policy
wasn't tied to the federal government's stance, and that
UnitedHealth hadn't seen an impact on its commercial business from
its rebate move.
The company highlighted a new deal its Optum health-services arm
reached with John Muir Health, saying Optum would manage an
extensive range of the California hospital system's services. Those
include information technology, purchasing and analytics. During
the earnings call, Eric Murphy, chief executive of OptumInsight,
said it was discussing similar setups with several other hospital
operators that, like John Muir, are independent community
systems.
UnitedHealth also said it was moving ahead with its deployment
of a personal digital-health record for its members, with the first
20 million set to roll out.
Write to Anna Wilde Mathews at anna.mathews@wsj.com and Kimberly
Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
July 18, 2019 13:12 ET (17:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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