Dive Brief:
-
UnitedHealth Group on Tuesday announced top-line revenue grew by nearly 9% year over year to $50.3 billion. Earnings from operations rose 14% to $4.1 billion.
-
The company increased its guidance for full year adjusted earnings to approach $10 per share, an increase from previous forecasts of $9.75 to $9.90 per share after beating analyst estimates.
-
During the earnings call, UnitedHealth, which has pulled back from the Affordable Care Act (ACA) exchanges, said it is interested in President Donald Trump’s executive order last week, which included association health plans and expanding short-term catastrophic health plans.
Dive Insight:
The payer portion of the company, UnitedHealthcare, grew by nearly 10% over the same period last year to $40.7 billion in the third quarter. The insurer covers 1.9 million more people across its employer-based, Medicare, Medicaid and international medical plan products than a year ago.
UnitedHealthcare grew by 540,000 members in the commercial group insurance market, but cut backs in the exchanges offset those gains and crimped revenues. Revenues for employer and individual insurance decreased by $197 million year over year to $13.1 billion.
While UnitedHealth has pulled back on its ACA offerings, the company continues to find success in Medicare Advantage (MA). UnitedHealthcare, which is the largest MA payer with about one-quarter of the market, said its Medicare and retirement offerings increased revenues by 17% to $16.3 billion. UnitedHealthcare added another 960,000 seniors to its coverage, a 12% increase over last year. That includes 105,000 more members in MA and Medicare supplemental products.
Those membership numbers will likely continue to grow in 2018. The CMS recently announced that overall MA enrollment is expected to increase by 9% to 20.4 million members next year. That will put MA enrollment at about one-third of Medicare enrollees.
UnitedHealth clearly sees potential in MA. In discussing MA’s growth opportunities in the past, UnitedHealth Group has predicted eventually half of all Medicare beneficiaries will have an MA plan.
Meanwhile, the company’s subsidiary Optum, which was the biggest highlight of the second-quarter earnings, also saw revenue growth in the third quarter. Optum’s revenues increased by 8% year over year to $22.9 billion while operating margins increased to 7.4%.
Optum earnings from operations rose 16%, and all Optum segments enjoyed double-digit percentage earnings growth. OptumHealth served about 90 million customers in the third quarter, which was 9 million more than last year.
With the earnings call coming on the heels of the president's executive order, UnitedHealth CEO David Wichmann said the company has experience in a few areas the order addresses: association health plans, short-term health plans and health reimbursement accounts. Wichmann said the company will work with policymakers on those areas.
Regarding the other recent Trump announcement, UnitedHealth officials said the loss of cost-sharing reduction payments would likely not impact the company much because it has already pulled out of most of its ACA exchanges.
The earnings are the second bit of good news for the company this month. Earlier, U.S. District Judge John Walter of California’s Central District threw out a whistleblower lawsuit that alleged UnitedHealth received larger MA payments because of supplying false claims information. The federal judge said the Department of Justice, which is taking part in the lawsuit, didn't show the insurance company knew the claims were false.