UNH UnitedHealth Group Inc

By Joshua Jamerson and Anna Wilde Mathews 

UnitedHealth Group Inc. boosted its earnings outlook for the year as it posted strong profit growth in the latest quarter on climbing revenue across its segments.

The Minnetonka, Minn., company now expects adjusted earnings for the year of about $8 a share compared with its previous forecast of $7.80 to $7.95 a share.

The health-care delivery businesses drove growth at Optum, its health-services unit, where revenue rose 9% to $21.1 billion. Optum is rapidly expanding its business of providing primary care -- the company has said it aims to have a "national platform," with owned or affiliated clinics in more than 75 major markets around the U.S. Optum has also benefited from UnitedHealth's acquisition of pharmacy-benefit manager Catamaran Corp., which was completed in July 2015.

Meanwhile, the insurer's medical-loss ratio -- the percentage of premiums paid in claims -- decreased 60 basis points year-over-year to 80.3% in the third quarter.

UnitedHealth said revenue from its employer-based and individual plans rose 12% to $13.3 billion in the period. It said growth from employer-sponsored groups offset decreases in individual benefit coverage.

The company said its losses on Affordable Care Act plans totaled around $200 million in the third quarter, about $120 million of which were offset by a previously-created premium deficiency reserve and $80 million of which impacted its third quarter results. At the end of the third quarter it had about 770,000 ACA exchange enrollees and 210,000 people who bought ACA plans outside of one of the law's exchanges.

UnitedHealth has said it would withdraw from nearly all of the health-law marketplaces next year, and previously said it anticipates losing about $850 million on ACA plans this year.

The largest U.S. health insurer and the first to report earnings, UnitedHealth is typically viewed as a bellwether for the industry. It offered reassurance on medical spending, saying the trend in its commercial business was "solidly in line" with its projection of 6% plus or minus 50 basis points.

Over all, UnitedHealth reported a profit of $1.97 billion, or $2.03 a share, for the third quarter of 2016, up from $1.6 billion, or $1.65, a year earlier. Excluding certain items, earnings rose to $2.17 a share from $1.77.

Revenue climbed 12% to $46.29 billion. Analysts had projected adjusted earnings of $2.08 a share on revenue of $46.09 billion, according to Thomson Reuters.

UnitedHealth also gave a limited preview of next year, saying was "comfortable" with analysts' 2017 earnings projections. Chief Executive Stephen J. Hemsley said the company intended to offer "positive body language" about next year, while reserving details until its investor day in late November.

Shares in the company climbed 7.2% to $143.77 and are now up 22% so far this year.

Write to Joshua Jamerson at joshua.jamerson@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

October 18, 2016 11:56 ET (15:56 GMT)

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