UnitedHealth Increases Guidance for Year -- Update
April 17 2018 - 3:14PM
Dow Jones News
By Allison Prang
UnitedHealth Group Inc. reported an almost 31% increase in
earnings 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.
On an adjusted basis, UnitedHealth made $3.04 a share compared with
$2.37 a share the year before.
Revenue rose 13% to $55.19 billion, helped by double-digit
percentage increases in both 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 to earn a per-share profit of
$11.70 and $11.95, or $12.40 and $12.65 on an adjusted basis.
Analysts are expecting adjusted earnings of $12.54 a share.
Shares, which rose 2.9% in afternoon trading, have gained 42% in
the past 12 months.
UnitedHealth had expected the recent new tax law to help
earnings by about 16% for the year and grow 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 climbed 13%, in line with the company's
overall increase in revenue, to $44.08 billion. Total operating
costs at the company rose 13% to $51.14 billion.
While investors had feared that flu trends early in the quarter
could ding earnings, the impact didn't drag down results.
UnitedHealth finance chief John Rex said its 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, but DaVita's group represents its highest-profile
deal so far in the doctor business.
Chief Executive David Wichmann said that UnitedHealth has
continued to acquire health-care providers at a "pretty consistent
pace," and said that the company is investing in technology through
its new Optum Ventures arm. Noting the company's deal for South
American health-care company Banmedica SA, he said UnitedHealth
continues its "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 17, 2018 14:59 ET (18:59 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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