UnitedHealth Group raises forecast; profit jumps as clinics grow

UnitedHealth Group beat expectations and raised financial guidance on Tuesday after reporting a third-quarter revenue jump that included more sales from the Minnetonka-based company's growing business running outpatient medical centers.

Earnings and revenue grew faster in the company's Optum health care services business, which includes clinics, surgery centers and urgent care centers, than in the legacy UnitedHealthcare health insurance business.

The results were the first full quarterly numbers since Optum closed on a deal in June to acquire DaVita Medical Group, which added more than 200 clinics across five states.

"Optum and UnitedHealthcare are driving value for our customers, creating momentum to finish the year strongly and move into 2020 with an intense focus on accelerating the growth of our businesses," said David Wichmann, the UnitedHealth Group chief executive, in a statement.

UnitedHealth Group is Minnesota's largest company with 320,000 employees worldwide, including about 18,000 workers in the state. UnitedHealthcare is the nation's largest health insurer, providing coverage in the U.S. to about 43.5 million people at the end of September.

During the third quarter, UnitedHealth posted earnings of $3.54 billion on $60.35 billion of revenue, according to numbers released Tuesday, better than year-ago quarterly profit of $3.19 billion on $56.56 billion or revenue. Adjusted earnings per share of $3.88 beat by 13 cents the expectations of analysts surveyed by Thomson Reuters.

Based on the results, United increased its full-year outlook for adjusted net earnings to a range of $14.90 to $15 per share, an increase of 15 cents per share at the midpoint.

It was the third consecutive quarter that UnitedHealth beat expectations and raised financial guidance for the year. Even so, the company's share price is down about 11% year-to-date due in large part to concerns that leading presidential candidates in the Democratic Party are pushing a "Medicare for All" health insurance system that could eliminate the private insurance market.

Investor sentiment for managed care companies like United "turned abruptly negative a year ago and has stubbornly remained there," wrote David Windley, an analyst with Jefferies, in a note to investors this month. "The primary poison in the punch bowl, political risk, won't likely abate for at least another nine months."

Third quarter revenue in the Optum division that includes the growing medical clinic business increased 34 % compared with the year-ago quarter to $8.1 billion.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck

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