UnitedHealth Beats Quarterly Expectations -- Update
April 15 2020 - 11:45AM
Dow Jones News
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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