UnitedHealth beats first-quarter profit estimates,
raises 2019 forecast
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 [April 16, 2019]
(Reuters) - UnitedHealth Group Inc reported
a first-quarter profit above estimates and raised its 2019 earnings
forecast, driven by strength in its pharmacy benefit management business
and higher enrollment for its health plans.
The largest U.S. health insurer's shares rose 2 percent to $235 in
pre-market trading.
The industry bellwether, which is the first health insurer to report
quarterly results, raised its full-year adjusted earnings forecast to
between $14.50 and $14.75 per share from its prior view of $14.40 to
$14.70.
"We find this notable, as UnitedHealth has historically been
conservative in adjusting guidance early in the year," Cantor Fitzgerald
analyst Steven Halper said.
The health insurance sector recorded its largest weekly share price
decline last week since March 2009, as worries persist over proposed
changes to the industry-wide system of rebates paid to insurers by
drugmakers.
UnitedHealth continues to deliver consistent performance, but now the
question is whether any rebound in shares can be sustained amid the
political overhang that has plagued the sector, Evercore ISI analyst
Michael Newshel said.
Optum, which is UnitedHealth's fastest-growing unit, brought in sales of
$26.36 billion in the quarter, a jump of nearly 12 percent from a year
earlier.
The rebates, integral to the business model of pharmacy benefit managers
(PBMs) like UnitedHealth's Optum, have been a target of the Donald Trump
administration that has prioritized lowering prescription drug prices in
the country.
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Traders work at the post
where UnitedHealth Group is traded on the floor of the New York
Stock Exchange (NYSE) in New York, U.S., January 31, 2018.
REUTERS/Brendan McDermid/File Photo
The unit benefited from growth in its care delivery, behavioral health
and health financial services, the company said.
Last year, rivals Cigna Corp and Aetna Inc combined with Optum's two
largest rivals, Express Scripts Holding and CVS Health Corp.
UnitedHealth's medical care ratio, which compares premiums with the cost
of delivering medical care, worsened to 82 percent, from 81.4 percent
last year, on deferral of the health insurance tax, the company said.
Analysts on average were expecting 82.2 percent.
In the quarter ended March 31, net earnings attributable to
UnitedHealth's shareholders rose 22.2 percent to $3.47 billion, or $3.56
per share, driven by the addition of 880,000 more members to its health
plans.
The company reported adjusted earnings of $3.73 per share, beating
estimates of $3.60 per share, according to IBES data from Refinitiv.
Total revenue rose 9.3 percent to $60.31 billion, ahead of estimates of
$59.7 billion.
(Reporting by Tamara Mathias and Manojna Maddipatla in Bengaluru;
Editing by Shounak Dasgupta)
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