UNH UnitedHealth Group Inc

By Allison Prang 

UnitedHealth Group Inc. reported an almost 31% increase in earnings for its latest quarter and raised its earnings outlook for the year.

UnitedHealth, the parent of the biggest U.S. health insurer, on Tuesday reported a first-quarter profit of $2.84 billion, or $2.87 a share, up from $2.17 billion, or $2.23 a share, a year earlier. On an adjusted basis, UnitedHealth made $3.04 a share compared with $2.37 a share the year before.

Revenue rose 13% to $55.19 billion, helped by double-digit percentage increases in both the company's health-insurance and Optum health-services segments.

Analysts polled by Thomson Reuters were expecting adjusted earnings of $2.89 a share. They expected revenue of $54.86 billion.

This year UnitedHealth expects to earn a per-share profit of $11.70 and $11.95, or $12.40 and $12.65 on an adjusted basis. Analysts are expecting adjusted earnings of $12.54 a share.

Shares, which rose 2.9% in afternoon trading, have gained 42% in the past 12 months.

UnitedHealth had expected the recent new tax law to help earnings by about 16% for the year and grow its cash flow by about $1.7 billion.

The company said its income-tax rate in its most recent quarter was 21.5%.

Revenue from premiums climbed 13%, in line with the company's overall increase in revenue, to $44.08 billion. Total operating costs at the company rose 13% to $51.14 billion.

While investors had feared that flu trends early in the quarter could ding earnings, the impact didn't drag down results. UnitedHealth finance chief John Rex said its growing diversity can help balance out the impact from costs of the U.S. winter flu season for its domestic health-insurance business.

Earnings from Optum operations rose 29%, outpacing growth from the health-insurance business.

UnitedHealth reached a deal in December to acquire DaVita Inc.'s physician group for $4.9 billion in cash. Those plans hit a bump last month when the Federal Trade Commission asked for more information about the deal.

Optum has been building up its roster of physician practices, clinics and surgery centers with years of mostly under-the-radar acquisitions, but DaVita's group represents its highest-profile deal so far in the doctor business.

Chief Executive David Wichmann said that UnitedHealth has continued to acquire health-care providers at a "pretty consistent pace," and said that the company is investing in technology through its new Optum Ventures arm. Noting the company's deal for South American health-care company Banmedica SA, he said UnitedHealth continues its "measured investments" in overseas assets.

"We're looking to add market presence and capability across our business, and you can expect us still to be very strong deployers of capital," while maintaining a strong balance sheet, he said.

Anna Wilde Mathews contributed to this article.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

April 17, 2018 14:59 ET (18:59 GMT)

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