UnitedHealth profit beats on strong growth across businesses

[April 17, 2018]   (Reuters) - UnitedHealth Group Inc on Tuesday posted a quarterly profit that beat Wall Street estimates, fueled by growth in its core insurance and health-services businesses and raised its earnings forecast for the year.

Shares of UnitedHealth rose 1.3 percent to $233.25 in premarket trading.

The largest U.S. health insurer has been adding more physicians through a series of acquisitions, helping drive its customer base, which grew by 2.2 million in the first quarter.

Revenue from the insurance business rose 13.3 percent to $45.46 billion, while revenue from the Optum unit, which houses its pharmacy benefits management business, grew 11.1 percent to $23.6 billion.

UnitedHealth's medical care ratio, or the percentage of premiums paid out for medical services, improved to 81.4 percent from 82.4 percent a year earlier, due primarily to a health insurance tax, which came into effect in the first quarter.

The company raised its full-year adjusted earnings forecast to a range of $12.40 to $12.65 per share from a range of $12.30 to $12.60 per share.

The health insurance sector has witnessed a number of big takeover deals in the past year as companies consider various options to stay competitive.

The logo of Down Jones Industrial Average stock market index listed company UnitedHealthcare is shown in Cypress, California April 13, 2016. REUTERS/Mike Blake

Recent deals include insurer Aetna Inc's <AET.N> $69 billion merger with CVS Health <CVS.N> and smaller rival Cigna Corp <CI.N> buying the largest independent pharmacy benefit manager, Express Scripts Holding Co <ESRX.O>, for $54 billion.

UnitedHealth's net earnings attributable to shareholders rose to $2.84 billion, or $2.87 per share, in the first quarter ended March 31 from $2.17 billion, or $2.23 per share, a year earlier.

Excluding items, the company earned $3.04 per share.

Total revenue rose 13.3 percent to $55.19 billion.

Analysts on average were expecting earnings of $2.89 per share on revenue of $54.86 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Tamara Mathias in Bengaluru; Editing by Shounak Dasgupta and Anil D'Silva)

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