UnitedHealth tops profit forecast, finally hikes outlook

UnitedHealth Group beat third-quarter forecasts, and the nation’s largest health insurance provider finally hiked its 2020 earnings outlook after holding off while trying to sort out COVID-19’s impact

Both analysts and insurers have said they expected medical costs to rise in the second half of the year, as communities that had shut down opened back up and people felt more comfortable seeking elective surgeries.

UnitedHealth said Wednesday that both care patterns and prescription volumes approached normal levels in its recently completed quarter. The company now expects adjusted net earnings to range between $16.50 to $16.75 per share for 2020.

That’s up from a forecast it first laid out late last year for 2020 earnings of between $16.25 and $16.55 per share. UnitedHealth usually raises its forecast a couple times during the year.

The new range mostly exceeds the average forecast on Wall Street for earnings of $16.57 per share, according to FactSet.

Its Optum segment also runs one of the nation’s largest pharmacy benefit management operations as well as a growing number of clinics and urgent care and surgery centers. Operating earnings from that segment grew 8% to $2.6 billion in the quarter.

Overall, the company’s net income dropped 10% to $3.17 billion in the quarter, due in part to costs tied to the pandemic.

The company booked medical costs from COVID-19 care and testing. It also gave some customers premium breaks and temporarily waived fees like co-payments for doctor visits.

In addition to that, UnitedHealth’s commercial insurance enrollment, which includes employer-sponsored coverage, slipped. Many companies laid off workers earlier this year as the pandemic spread in the U.S. and the economy slowed down.

UnitedHealth’s adjusted earnings totaled $3.51 per share in the third quarter. Total revenue rose about 8% to $65.11 billion.

Analysts expected, on average, adjusted earnings of $3.10 per share in the quarter on $63.79 billion in revenue, according to financial data provider FactSet.

Company shares edged up about 1% to $334.51 in early-morning trading Wednesday.

Shares of UnitedHealth, a Dow Jones industrial average component, have hit several all-time high prices so far this year.

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Follow Tom Murphy on Twitter: @thpmurphy

source: abcnews.go.com