By Dave Sebastian 

UnitedHealth Group Inc. topped profit and sales expectations for the latest quarter, which saw the coronavirus pandemic rapidly progressing in the U.S. later in the period and softening demand for elective care.

The parent of the nation's largest health insurer posted first-quarter net income of $3.38 billion, or $3.52 a share, compared with $3.47 billion, or $3.56 a share, in the same period a year earlier. Adjusted earnings were $3.72 a share, ahead of the $3.63 a share analysts polled by FactSet had expected.

Sales were $64.42 billion, up 6.8% from the comparable quarter last year. Analysts were expecting $64.12 billion.

The medical-loss ratio -- the percentage of premium revenue spent on health care -- at its insurance unit was 81%, lower than the 82% analysts had expected.

With demand for elective care still restrained, medical-loss ratio in the second quarter could be the lowest of the year, with the potential for demand to pick up later in the year, finance chief John Rex said on a call with investors.

The reduced demand for elective care, such as surgeries, has also affected the UnitedHealthcare health-insurance and OptumCare health-services businesses, Chief Executive David Wichmann said.

"Many employers have had to furlough employees, driving higher levels of unemployment, which may ultimately affect the outlook for growth in our group benefits business while increasing our membership in individual lines and Medicaid coverages," Mr. Wichmann said.

The company's UnitedHealthcare unit recorded revenue of $51.1 billion, up 4.4% from the year-ago period due to growth in Medicare Advantage and dual special-needs plans. The number of people with commercial benefits fell 475,000 from the prior year, while those served under Medicare Advantage grew 410,000.

UnitedHealthcare has also waived cost-sharing for Covid-19 testing and related visits and said it would ease some administrative rules to give patients more access to care during the pandemic.

Sales for the company's Optum health-services business grew 24.6% to $32.8 billion. The unit has cared for more than 10,000 Covid-19 patients and is operating more than 400 test sites in the U.S., Mr. Wichmann said.

Operating costs rose to $59.43 billion from $55.48 billion.

The company last week said it is accelerating payments to doctors and hospitals, starting with about $2 billion, to ease a cash crunch that has resulted in health-care providers furloughing workers. UnitedHealth also said it has provided early refills, prolonged authorizations and increased home-delivery options to ensure no shortages.

UnitedHealth affirmed its 2020 guidance forecasting earnings of $15.45 to $15.75 a share and adjusted earnings of $16.25 to $16.55 a share.

Also on Wednesday, the company said Andrew Witty, UnitedHealth's president and the chief executive of Optum, will take a leave of absence to assist with the World Health Organization's Covid-19 vaccine efforts.

Write to Dave Sebastian at dave.sebastian@wsj.com

 

(END) Dow Jones Newswires

April 15, 2020 11:30 ET (15:30 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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