UnitedHealth Profit Declines, Reflecting Return to More Usual Health-Care Levels

By Anna Wilde Mathews and Matt Grossman 

UnitedHealth Group Inc.'s profit declined after outsize results in the previous quarter, as health care returned closer to normal levels after a dramatic pandemic-related pause in the spring and early summer.

Minnetonka, Minn.-based UnitedHealth, the parent of the largest U.S. insurer, UnitedHealthcare, as well as a sprawling health-services arm under the Optum name, said its third-quarter results were affected by the cost of efforts to help customers. The company pointed to waivers of copayments for Medicare Advantage enrollees and some premium discounts. UnitedHealth and other insurers have come under pressure from some regulators and lawmakers to disburse some of the profit they realized from the falloff in routine health care earlier this year.

The company logged a continued decline in commercial membership, to 26.35 million in the third quarter from 25.77 million in the second quarter and 27.84 million in the year-ago period, reflecting the loss of some employer-based insurance during the economic downturn.

UnitedHealth said it had seen declines in sectors including transportation, hospitality and energy. But it said it didn't believe growing enrollment in its Medicaid plans stemmed from people signing up after job losses.

The company reported third-quarter net income of $3.17 billion, or $3.30 a share, compared with $3.54 billion, or $3.67 a share, in the same three-month period a year earlier.

In the second quarter of 2020, UnitedHealth posted net income of $6.64 billion, or $6.91 a share, and adjusted earnings were $7.12 a share.

On an adjusted basis, UnitedHealth's third-quarter profit was $3.51 a share. Analysts surveyed by FactSet had forecast an adjusted profit of $3.11 a share. Revenue was $65.12 billion, up 7.9% from $60.35 billion in last year's third quarter.

In the spring and early summer, UnitedHealth's insurance unit benefited financially from cost savings as it paid for fewer doctor visits, surgeries and hospital stays this spring and early in the summer. Hospitals and other health-care providers stopped many procedures as they braced for surges of coronavirus patients, and many Americans steered clear of clinics and emergency rooms.

Hospital inpatient costs and other types of care picked back up in the quarter. Health-care activity was at more than 95% of typical baseline rates, UnitedHealth said. The insurance unit's medical-loss ratio, or the share of premiums paid out in claims, was 81.9% in the third quarter, compared with 70.2% in the second.

UnitedHealth raised its guidance for full-year adjusted 2020 earnings to a range $16.50 to $16.75 a share, from $16.25 to $16.55 previously.

Write to Anna Wilde Mathews at [e-mail] and Matt Grossman at [e-mail]

(END) Dow Jones Newswires

October 14, 2020 12:22 ET (16:22 GMT)

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