Monday, September 26, 2022

UnitedHealth tops Q1 forecasts, raises 2022 outlook

UnitedHealth Group performed better than expected in the first quarter and raised its forecast for 2022, as growth in Medicare Advantage and care delivery helped the health care giant once again.

The nation’s largest health insurance provider said Thursday that enrollment in its Medicare Advantage plans rose nearly 9% to nearly 6.9 million, and the company also reported growth in other government-funded coverage. Its large commercial enrollment remained almost flat.

UnitedHealth is the largest provider of Medicare Advantage plans, which are privately run versions of the federally funded Medicare program.

The company runs UnitedHealthcare, a health insurance business that covers more than 50 million people mostly in the United States. It’s also squeezing more growth out of its Optum segment, which runs one of the nation’s largest pharmacy benefits managers and a growing number of clinics and urgent care and surgery centers.

First-quarter operating income, which does not count interest expense and taxes, decreased for the company’s health insurance business, but increased nearly 20% for Optum to $3.2 billion over the past year.

UnitedHealth said the revenue it generated per customer from its care-delivering Optum Health business increased 33% as the company expanded deeper into value-based care. This involves reimbursing doctors based on the health of the patient, rather than on each service provided.

UnitedHealth and competitors such as drugstore chains CVS Health and Walgreens are trying to become regular sources of care for all the more customers, especially those with Medicare Advantage plans.

The idea is that routine care will keep patients with chronic health problems such as diabetes healthier and out of expensive hospitals. This is an approach favored by insurers and employers such as bill payers.

Overall, UnitedHealth’s earnings rose more than 3% to $5.03 billion in the first quarter, even though the company’s biggest expense, medical costs, climbed 17%.

UnitedHealth started the quarter in January with nearly 40,000 COVID-19 hospitalizations, company leaders told analysts Thursday morning. This is the highest total for any month since the pandemic began more than two years ago.

That total had dropped to nearly 2,000 hospitalizations by March, as the Omicron surge of the virus faded.

UnitedHealth’s adjusted results were $5.49 per share in the first quarter, and total revenue rose more than 14% to $80.1 billion.

Analysts were expecting average earnings per share of $5.36 in the second quarter, up from $78.73 billion in the second quarter, according to FactSet.

For the full year, UnitedHealth now expects adjusted earnings of $21.20 to $21.70 per share. This is an increase of 10 cents on both ends of the range from the forecast given at the end of last year.

FactSet says analysts expect earnings of $21.61 per share for 2022.

Jefferies analyst David Windley said in a research note that UnitedHealth’s forecast growth was conservative compared to how much the company beat first-quarter expectations. But he said this was expected given the unknown nature of the pandemic.

Shares of Minnetonka, Minnesota-based UnitedHealth Group Inc. rose slightly to $538.09 in afternoon trading on Thursday. The Dow Jones Industrial Average, of which UnitedHealth is a component, also rose slightly.

UnitedHealth’s share price has more than doubled over the years.

Nation World News Desk
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