(Bloomberg) -- UnitedHealth Group Inc., the largest U.S. health insurer, raised its 2015 forecast after posting first-quarter profit that topped analysts’ estimates as it added customers and its Optum technology unit boosted revenue.
Earnings, excluding certain items, will be $6.15 to $6.30 a share, the Minnetonka, Minnesota-based insurer said Thursday in a statement. The company had said as recently as last month that 2015 profit would be $6 to $6.25 a share. Analysts had estimated $6.21, on average, according to data compiled by Bloomberg.
UnitedHealth has been adjusting to new taxes and regulations under the Patient Protection and Affordable Care Act, known as Obamacare. The insurance operation has benefited from an expansion of coverage, though profit margins can be narrower in government-funded programs like Medicaid.
First-quarter net income rose to $1.41 billion, or $1.46 a share, from $1.1 billion, or $1.10, a year earlier. Analysts had estimated $1.35 per share on average.
UnitedHealth is the first managed-care company to report first-quarter results. Its shares fell 2.2 percent to $117.32 at Wednesday’s close in New York. The stock has advanced 16 percent this year, beating the 2.3 percent gain of the Standard & Poor’s 500 Index.
Growth at UnitedHealth has been fueled by the Optum business, which provides technology and consulting, and manages pharmacy benefits. The company said today it expects $143 billion in revenue this year, an increase of $2 billion from its previous forecast.
“Optum is their biggest driver,” Ana Gupte, an analyst at Leerink Partners, said before the results were announced. “They’ve grown very well on the Medicaid side of the house.”
To bolster Optum’s pharmacy business, UnitedHealth struck a deal last month to buy rival Catamaran Corp. for $12.8 billion. Firms like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. Optum now covers about 30 million people, and the Catamaran deal will add another 35 million.
UnitedHealth’s earnings forecast for 2015 includes absorbing about 10 cents per share from the Catamaran purchase. The combination will add about 30 cents per share to earnings in 2016, the company said.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
