UnitedHealth Tops Expectations, Raises Guidance

UnitedHealth Group Inc. on Tuesday raised its guidance for the year as the biggest U.S. health insurer revised its estimates on income taxes and amortization and reported better-than-expected earnings in the first quarter.

The Minnetonka, Minn., company now expects adjusted earnings for the year of about $7.75 to $7.95 a share on revenue of $182 billion, compared with its previous guidance of $7.60 to $7.80 a share and at least $180 billion in revenue. UnitedHealth said the increase in earnings is due to changes in the expected income-tax rate and intangible amortization.

Chief Executive Stephen Hemsley also pointed to organic growth and strong customer retention in the most recent quarter.

UnitedHealth's health-services arm Optum continued to show strength, with revenue there jumping 54% to $19.7 billion, representing about 44% of the company's top line, powered by Optum's pharmacy care services. The business has been buoyed by UnitedHealth's acquisition of pharmacy-benefit manager Catamaran Corp., which closed in July.

During the quarter, UnitedHealth added 3.1 million customers, bringing its tally to roughly 43.6 million.

UnitedHealth said its medical-cost ratio increased 30 basis points year-over-year to 81.7%, reflecting the extra calendar day of service in the quarter. The company added that medical cost trends were well-controlled in the first quarter and consistent with management expectations.

Overall, the company reported a profit of $1.61 billion, or $1.67 a share, up from $1.41 billion, or $1.46, a year earlier. Excluding certain items, adjusted earnings rose to $1.81 a share from $1.55.

Revenue climbed 25% to $44.53 billion. Analysts had projected earnings of $1.72 a share on revenue of $43.96 billion.

Shares in the company, which kicks off earnings reports for health insurers, have risen 14% over the past three months and were inactive premarket.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

April 19, 2016 07:35 ET (11:35 GMT)

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