Medicare, Medicaid Enrollments Boost UHG Earnings 23%
UnitedHealth Group, Inc., reported a 23 percent jump in its third-quarter net income, thanks in part to an increase in Medicare and Medicaid enrollments.
The Minnetonka-based health care giant on Tuesday reported net income of $1.56 billion, or $1.50 per share, for the quarter that ended on September 30. (Analysts polled by FactSet Research Systems had forecast net income of $1.34 per share.) Its earnings for the same quarter last year totaled $1.27 billion, or $1.17 per share.
Meanwhile, revenue for the quarter totaled $27.3 billion, representing a year-over-year increase of nearly 8 percent, but missing the expectations of analysts polled by FactSet, who predicted $27.58 billion.
Given its strong third-quarter earnings, UnitedHealth Group raised its 2012 full-year earnings forecast. The company now expects its 2012 net income to be in the range of $5.20 to $5.25 per share, up from its previous forecast of $4.90 to $5 per share, but short of the $5.28 average of seven analyst estimates compiled by Bloomberg.
“We expect strong execution to continue in 2013,” UnitedHealth group CEO Stephen Hemsley said during a Tuesday morning earnings call. But “given the weak business climate and employment outlook in the United States, the mounting pressures on federal and state budgets—to mention just a few of the challenges—we continue to be cautious about 2013 earnings performance.”
The company, which offers insurance plans through its UnitedHealthcare platform, said that revenue from its retirement and Medicare plans business increased 13 percent year-over-year to $10 billion—and enrollment for its Medicare Advantage plan climbed 18 percent to 2.6 million people from the same quarter last year. A Medicare Advantage plan is a type of Medicare plan offered by privately-held corporations through contracts with the government.
According to the Associated Press, big health insurers have been acquiring smaller Medicare Advantage plan providers to prepare for the millions of Baby Boomers who will become eligible for Medicare coverage over the next two decades. Earlier this year, UnitedHealth bought two Florida-based companies in two separate deals, which together added about 85,000 Medicare Advantage members and 12,200 Medicaid members from across Florida to the company’s fold.
UnitedHealth Group’s revenue from its community and state business, which includes Medicaid plans for low-income and disabled people, climbed 12 percent to $420 million in the third quarter. The company said that it added 385,000 Medicaid enrollees within the past year.
Overall, UnitedHealthcare’s operating earnings grew 26 percent from the third quarter of last year to $2.2 billion, and the unit added 2.15 million customers since that period.
The company’s other major business unit, Optum—which provides consulting and technology services to hospitals, governments, and other clients, and manages pharmacy-benefit plans for employers—increased its operating earnings by 28 percent to $408 million, while its revenue remained flat at $7.2 million.
UnitedHealth Group is Minnesota’s largest public company based on revenue, which totaled $101.9 billion in 2011. The company, which employed 99,000 as of the end of last year, has been on a hiring spree recently, having recently announced plans to hire roughly 2,300 across the United States.