UnitedHealth's Outlook Improves -- WSJ

By Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 18, 2018).

UnitedHealth Group Inc. posted a 31% increase in profit for its latest quarter and raised its earnings outlook for the year.

UnitedHealth, the parent of the biggest U.S. health insurer, on Tuesday reported a first-quarter profit of $2.84 billion, or $2.87 a share, up from $2.17 billion, or $2.23 a share, a year earlier. The company earned $3.04 a share on an adjusted basis, compared with $2.37 a share.

Revenue rose 13% to $55.19 billion, helped by double-digit percentage increases in the company's health-insurance and Optum health-services segments.

Analysts polled by Thomson Reuters were expecting adjusted earnings of $2.89 a share. They expected revenue of $54.86 billion.

This year UnitedHealth expects a per-share profit of between $11.70 and $11.95, or between $12.40 and $12.65 on an adjusted basis.

Analysts expect adjusted earnings of $12.54 a share.

Shares in UnitedHealth were 3.6% higher at $238.54 on Tuesday afternoon. The stock is up 44% over the past 12 months.

UnitedHealth had expected the recent new tax law to help earnings by about 16% for the year and increase its cash flow by about $1.7 billion.

The company said its income-tax rate in its most recent quarter was 21.5%.

Revenue from premiums rose 13% -- in line with the company's overall increase in revenue -- to $44.08 billion. Total operating costs at the company increased 13% to $51.14 billion.

While investors had feared that flu trends early in the quarter could hurt earnings, the impact didn't drag down results. UnitedHealth finance chief John Rex said the company's growing diversity can help balance out the impact from costs of the U.S. winter flu season for its domestic health-insurance business.

Earnings from Optum operations rose 29%, outpacing growth from the health-insurance business.

UnitedHealth reached a deal in December to acquire DaVita Inc.'s physician group for $4.9 billion in cash. Those plans hit a bump last month when the Federal Trade Commission asked for more information about the deal.

Optum has been building up its roster of physician practices, clinics and surgery centers with years of mostly under-the-radar acquisitions, and DaVita's group represents its highest-profile deal so far in the doctor business.

Chief Executive David Wichmann said UnitedHealth has continued to acquire health-care providers at a "prettyconsistent pace," and said the company is investing in technology through its new Optum Ventures arm. Noting the company's acquisition of South American health-care firm Banmédica SA, he said UnitedHealth is making "measured investments" in overseas assets.

"We're looking to add market presence and capability across our business, and you can expect us still to be very strong deployers of capital," while maintaining a strong balance sheet, he said.

Anna Wilde Mathews contributed to this article.

Write to Allison Prang at [e-mail]

(END) Dow Jones Newswires

April 18, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.