UnitedHealth Group Inc. on Thursday boosted its full-year outlook as the largest U.S. health insurer reported better-than-expected earnings and revenue in its second quarter.
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UnitedHealth said it now expects revenue of $154 billion, up from its previous forecast of $143 billion. The company is now calling for earnings of $6.25 to $6.35 per share, up from its prior outlook of $6.15 to $6.30 per share.
UnitedHealth said the guidance reflects its deal to buy Catamaran Corp., expected to close in July, and its strong business performance.
The U.S. health-insurance sector is in the midst of deal frenzy, and investors are watching closely for signs of UnitedHealth's willingness to join the fray.
Earlier this month, Aetna Inc. struck a deal to buy Humana Inc. for $34.1 billion after a five-way merger frenzy. Anthem Inc. has bid for Cigna Corp., while UnitedHealth earlier approached Aetna about a deal, The Wall Street Journal has reported.
The consolidation momentum is being fed by a desire to diversify and cut costs, amid a landscape changed by the Affordable Care Act. Insurers are eager to reduce expenses and build scale that will help them face off against health-care providers that are bulking up. The providers themselves are growing partly with an eye toward new forms of payment encouraged by the health law.
For the period ended June 30, UnitedHealth posted earnings of $1.59 billion, or $1.64 a share, up from $1.41 billion, or $1.42 a share, a year earlier.
Revenue grew 11% to $36.26 billion.
Analysts had projected a per-share profit of $1.58 and revenue of $35.66 billion.
Optum--UnitedHealth's health-services arm--saw revenue grow 16% to $13.6 billion.
The company said its medical-care ratio, a key industry metric that reflects the portion of insurance premiums used for patient care, ticked down 0.2 percentage points to 81.4% from a year earlier. UnitedHealth said medical costs were controlled and in-line with expectations.