By Anne Steele 

UnitedHealth Group Inc. on Tuesday raised its guidance for the year as the biggest U.S. health insurer revised its estimates on income taxes and amortization and reported better-than-expected earnings in the first quarter.

The Minnetonka, Minn., company now expects adjusted earnings for the year of about $7.75 to $7.95 a share on revenue of $182 billion, compared with its previous guidance of $7.60 to $7.80 a share and at least $180 billion in revenue. UnitedHealth said the increase in earnings is due to changes in the expected income-tax rate and intangible amortization.

Chief Executive Stephen Hemsley also pointed to organic growth and strong customer retention in the most recent quarter.

UnitedHealth's health-services arm Optum continued to show strength, with revenue there jumping 54% to $19.7 billion, representing about 44% of the company's top line, powered by Optum's pharmacy care services. The business has been buoyed by UnitedHealth's acquisition of pharmacy-benefit manager Catamaran Corp., which closed in July.

During the quarter, UnitedHealth added 3.1 million customers, bringing its tally to roughly 43.6 million.

UnitedHealth said its medical-cost ratio increased 30 basis points year-over-year to 81.7%, reflecting the extra calendar day of service in the quarter. The company added that medical cost trends were well-controlled in the first quarter and consistent with management expectations.

Overall, the company reported a profit of $1.61 billion, or $1.67 a share, up from $1.41 billion, or $1.46, a year earlier. Excluding certain items, adjusted earnings rose to $1.81 a share from $1.55.

Revenue climbed 25% to $44.53 billion. Analysts had projected earnings of $1.72 a share on revenue of $43.96 billion.

Shares in the company, which kicks off earnings reports for health insurers, have risen 14% over the past three months and were inactive premarket.

Write to Anne Steele at Anne.Steele@wsj.com

 

(END) Dow Jones Newswires

April 19, 2016 07:27 ET (11:27 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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