- Insurer added $200 million in Affordable Care Act plan losses
- Medical loss ratio climbs to 82 percent during the period
UnitedHealth Group Inc., the largest U.S. health insurer, reported second-quarter profit that beat analysts’ estimates, driven by growth at its Optum technology and consulting unit.
Optum, whose businesses range from data analysis to running clinics, has accounted for an increasing chunk of UnitedHealth’s profit. That helped cushion an additional $200 million loss from sales of Affordable Care Act health plans during the period. Including the fresh losses disclosed Tuesday, 2016 ACA plans will cut into UnitedHealth’s earnings by about $850 million. The company has already said it’s broadly retreating from the market, after offering plans in 34 states for this year.
Earnings were $1.96 a share, excluding some items, UnitedHealth said Tuesday in a statement, compared with the $1.89 average estimate of 21 analysts surveyed by Bloomberg. The company also raised the lower end of its 2016 earnings forecast range by 5 cents. UnitedHealth now expects earnings of $7.80 to $7.95 a share, excluding some items, up from $7.75 to $7.95. Analysts anticipate $7.89, on average.
- Net income rose 11 percent to $1.75 billion, or $1.81 a share, on revenue of $46.5 billion.
- Operating profit from Optum rose 46 percent to $1.26 billion, while profit at the health-insurance business dropped 4.4 percent to $1.94 billion.
UnitedHealth is the first health insurer to post second-quarter results, making its report an important gauge for how the entire industry is faring. The losses on plans sold to individuals under the Affordable Care Act helped push medical spending to 82 cents of every premium dollar, from 81.7 cents a year earlier.
Optum includes units that help doctors and hospitals analyze data and treat and bill patients. It also aids employers with health benefits, runs clinics and has a pharmacy-benefits business. The business expanded with the purchase of pharmacy-benefits manager Catamaran Corp. in July 2015.