UnitedHealth Group profit jumps 28 percent, beating analysts’ forecasts

Oct. 16--Third quarter profit was up 28 percent at Minnetonka-based UnitedHealth Group, as the nation's largest health insurer beat analyst expectations and raised financial guidance for the year.

The company's shares jumped more than 4 percent in early trading.

United's health insurance division UnitedHealthcare continued to generate most of the company's revenue in the quarter, but the Optum unit for health care services generated a bigger profit margin. Optum includes direct patient care, a division for analytics and information technology and a pharmaceutical benefits management (PBM) business that's growing with acquisitions.

On Tuesday, United disclosed that the PBM business has acquired a Phoenix-based specialty pharmacy called Avella. Last month, UnitedHealth Group acquired Genoa Health, which runs pharmacies in behavioral health clinics, for a reported $2.5 billion.

"During the quarter we acquired both Avella and Genoa, both of which are going to be potentially very important additions to our specialty pharmacy portfolio," said Andrew Witty, the Optum chief executive, during a call with investors to discuss the results. "Drug companies are free to increase prices at will. The PBM acts as a mechanism to discipline that process."

Among the three Optum businesses, the division for direct patient care grew revenue at the fastest pace during the quarter at 15 percent over the year-ago period to $6 billion. Through acquisitions in recent years, United is now one of the nation's largest operators of surgery and urgent care centers, and also has been purchasing large medical groups.

On the health insurance side, United's global division, which features coverage and care delivery in South America, posted revenue growth of 18 percent over the year-ago period to nearly $2.4 billion.

For the quarter, UnitedHealth Group overall posted earnings of $3.2 billion on revenue of $56.6 billion, for a profit margin of 5.6 percent -- an improvement over the third quarter last year.

On a per-share basis, adjusted earnings of $3.41 beat by 12 cents the earnings expected among analysts surveyed by Thomson Reuters.

For 2018, United now expects net earnings per share to approach $12.10, up from the prior range of $11.80 to $12.05, and adjusted net earnings per share to approach $12.80, which is beyond the prior range of $12.50 to $12.75.

UnitedHealth Group employs about 18,000 people in Minnesota.

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