UnitedHealth profit beats on strength in Optum, insurance units

UnitedHealth profit beats on strength in Optum, insurance units

UnitedHealth Group Inc , the largest U.S. health insurer, reported a 16 percent drop in quarterly profit on Tuesday due to higher operating costs and a provision for income tax.

Traders work at the post where UnitedHealth Group is traded on the floor of the NYSE in New York
FILE PHOTO: 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

REUTERS: UnitedHealth Group Inc beat Wall Street estimates for fourth-quarter profit on Tuesday, helped by growth in services business as well as its mainstay health insurance plans.

The largest U.S. health insurer kicked off earnings season for the sector, reporting US$46.23 billion in sales in its insurance business, an 11.1 percent rise from a year earlier.

Revenue from Optum, which includes a pharmacy benefits management business, grew 13 percent to US$27.56 billion in the quarter, benefiting from growth in care delivery, behavioral health and health financial services, the company said.

UnitedHealth and its Optum unit are set to face tough competition this year, as health insurer rivals Cigna Corp and Aetna Inc entered into separate deals with large benefit managers.

UnitedHealth's 2018 medical care ratio, or the percentage of premiums paid out for medical services, improved to 81.6 percent from 82.1 percent last year.

The health insurer also affirmed its 2019 profit forecast.

"Despite the beat, management did not increase its 2019 guidance. This is not surprising to us. Over the years, UnitedHealth has typically been conservative," Cantor Fitzgerald analyst Steven Halper said in a client note, calling the results a "solid finish" to 2018.

Net earnings attributable to shareholders fell 16 percent to US$3.04 billion, or US$3.10 per share, in the quarter ended Dec. 31.

Excluding items, the company earned US$3.28 per share. Total revenue rose about 12 percent to US$58.42 billion.

Analysts on average were expecting earnings of US$3.21 per share and revenue of US$58.01 billion, according to IBES data from Refinitiv.

Shares of the Hopkins, Minnesota-based company rose 1.6 percent to US$252 in light trading before the opening bell.

(Reporting by Tamara Mathias in Bengaluru; Editing by Arun Koyyur)

Source: Reuters

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