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 UnitedHealth is the largest U.S. health insurer and one of the
biggest sellers of plans on the exchanges, which were created as
part of President Barack Obama's national healthcare law.
UnitedHealth sells these plans in 34 states this year, up from 25
states last year.
"Next year, we will remain in only a handful of states,"
UnitedHealth CEO Stephen Hemsley said in prepared remarks as part of
the company's first-quarter earnings report.
The company warned investors late last year that it was losing money
on the new plans and might exit the market. On Tuesday, the company
raised its 2016 expectation for losses on the exchanges by $125
million to $650 million.
UnitedHealth's Hemsley said that the shorter term, higher risk
profile of the new members, as well as the smaller than expected
enrollment, suggested UnitedHealth could not offer plans on a
sustained basis.
For the first quarter, United Health's profit was
better-than-expected and UnitedHealth shares rose 1.9 percent to
$130.29 in early New York Stock Exchange trading.
Other health insurers including Aetna Inc and Anthem Inc are also
large players on the exchanges. In recent months they said they will
continue to sell exchange plans.
The company has 795,000 customers from the exchanges, more than half
of them new to UnitedHealth, it said. It expects about 650,000
members by year end.
The government said in February that more than 12 million people had
signed up for Obamacare-related insurance through HealthCare.gov or
a state-based exchange as of Jan. 31. Previous government
expectations had been for more than 20 million people.
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RAISES 2016 PROFIT OUTLOOK
UnitedHealth raised its expectations for 2016 profit, in part
because of a more favorable tax rate that also helped it beat Wall
Street expectations for the first quarter.
Lower sales and administrative costs and a decline in amortization
of intangible assets also helped its first quarter results. On an
adjusted basis the health insurer earned $1.81 per share, compared
with Wall Street analyst expectations for earnings of $1.72 per
share, according to ThomsonReuters I/B/E/S.
Net profit rose to $1.61 billion, or $1.67 per share, from $1.41
billion or $1.46 per share, a year earlier.
The company now expects 2016 adjusted net earnings of $7.75-$7.95
per share, up 15 cents per share from its previous estimate.
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