UnitedHealth Beats Earnings Expectations

UnitedHealth reported, this week, that first-quarter profit surpassed estimates, largely as a result of strong showings from its pharmacy benefit management business and higher health plan enrollment.  With that, of course, the largest US health insurer raised its earnings forecast for 2019, which helped bump shares by 2 percent, to $235 per share, in pre-market trading, on Tuesday.

The company is a beacon for the industry as the first to issue its quarterly report, and it is leading the way by raising its full-year adjusted earnings forecast from a range of $14.40 to $14.70 to a range of $14.50 to $14.75.  

This is quite notable because the health insurance sector showed its biggest weekly share price decline since March of 2009. And this decline comes on the heels of concerns over industry-wide changes to the drugmaker-insurer rebate system.

UnitedHealth’s fastest-growing unit, Optum, registered $26.36 billion in sales for the first quarter. This is a large number, indeed, but what’s more impressive is that this is a 12 percent jump from the year before. 

In terms of its whole business, though, UnitedHealth’s medical care ratio—which is a metric that judges premiums weighed against the cost of medical care delivery—fell by 82 percent, which is right in line with analyst expectations.  This is up only slightly from last year’s drop of 81.4 percent, and is mostly driven by health insurance tax deferral.  

All that in mind, UnitedHealth also seems to be on top of its game in terms of performance.  The company delivers consistently, but the question now is whether or not rebounding shares could hold up through the political instability that has plagued the rest of the sector.  

Should the company manage to maintain this momentum, they could certainly build on shareholder earnings as well. In the first quarter of this year, alone, shareholder net earnings grew 22.2 percent, to $3.47 billion. That is equivalent to about $3.56 per share.  

Finally, UnitedHealth reported adjusted earnings of $3.73 per share, which also beat analyst estimates of $3.60. This is all in relation to revenue growth of 9.3 percent, to $60.31 billion.