UnitedHealth Lifts Outlook as Sales Rise -- WSJ

Date : 10/16/2019 @ 7:02AM
Source : Dow Jones News
Stock : UnitedHealth Group Inc (UNH)
Quote : 275.56  0.0 (0.00%) @ 12:00AM

UnitedHealth Lifts Outlook as Sales Rise -- WSJ

UnitedHealth (NYSE:UNH)
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By Anna Wilde Mathews and Dave Sebastian 

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 16, 2019).

UnitedHealth Group Inc. boosted its profit guidance for the year as revenue growth from its health services and insurance units fueled the company's third-quarter performance.

The company, parent of the nation's largest health insurer, also on Tuesday offered initial comments about its expectations for 2020, which investors closely watch.

Wall Street reacted positively to the updates, sending shares up 8.2% on the New York Stock Exchange. The stock had lost about 12% so far this year.

Regarding 2020 results, UnitedHealth Chief Executive David Wichmann suggested on a call with analysts that adjusted earnings per share growth could be around the lower end of the company's typical 13% to 16% goal. That excluded the impact of the return of an Affordable Care Act health-insurance tax, which had been suspended for this year.

Mr. Wichmann estimated that tax would affect earnings per share by around 50 cents in total, with 35 cents of that pulling down results in 2020. He also suggested that analysts include a range of about 15 cents around their projections.

Matthew Borsch, an analyst with BMO Capital Markets, said that the implied midpoint of Mr. Wichmann's suggested range was lower than current analyst projections for 2020, but it likely met investors' expectations, coming on top of solid 2019 results. "It's coming out the way people predicted," he said.

UnitedHealth typically offers cautious earnings guidance, which it tends to consistently beat.

UnitedHealth officials steered clear of commenting on hot-button political topics such as some Democratic presidential candidates' proposals to replace private insurance with a universal government plan.

Investor perception of political momentum around such "Medicare for All" ideas has helped push down the shares of UnitedHealth and other managed-care companies this year, analysts say.

UnitedHealth per-share earnings for 2019 are projected to reach between $14.15 and $14.25, compared with the company's previous forecast of $13.95 to $14.15. UnitedHealth said it expects adjusted per-share earnings to come in between $14.90 and $15 a share, compared with earlier projections of $14.70 a share to $14.90 a share.

For the third quarter of 2019, earnings rose to $3.67 a share, up 13% from the comparable period last year. Analysts were expecting $3.55 a share. Net income attributable to UnitedHealth common shareholders rose to $3.54 billion from $3.19 billion a year ago.

UnitedHealth reported an adjusted profit of $3.88 a share, topping analysts' estimates of $3.75 a share.

The company posted sales of $60.35 billion for the third quarter, up 6.7% from the comparable quarter a year ago and beating the $59.76 billion analysts polled by FactSet had expected. Sales for the Optum health-services business grew 13% to $28.8 billion compared with the year-ago period.

The medical loss ratio for UnitedHealthcare, the insurance arm, was 82.4%, which analysts said was in line with projections. The medical loss ratio represents the share of premiums paid out in claims.

The figure was higher than the year-ago result, largely because of the suspended health-insurance tax, the company said. The tax, a pass-through, had previously increased the revenue part of the ratio.

Analysts also pointed to an extra weekday in the quarter, compared with the previous year, as a factor that could increase MLR.

UnitedHealth executives said medical expenses had matched their expectations, with outpatient and physician costs slightly lower than projected and inpatient in line with estimates.

Sales for the UnitedHealthcare health-benefits platform grew 4.8% to $48.1 billion during the quarter as commercial and Medicare Advantage membership grew, UnitedHealth said.

Write to Anna Wilde Mathews at anna.mathews@wsj.com


(END) Dow Jones Newswires

October 16, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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