UnitedHealth (NYSE:UNH) reported a stronger-than-expected 6% increase in second-quarter profit on better expense management and enrollment among older customers and lifted its full-year earnings and sales forecasts.
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UnitedHealth, which is the first major health insurer to report earnings after the U.S. Supreme Court upheld President Barack Obama’s healthcare law last month, boosted its outlook for 2012 revenues to $110 billion, which matches Wall Street views.
The biggest U.S. health insurer lifted its earnings guidance to the range of $4.90 to $5 a share. Analysts on average are looking for at least $4.99 a share.
The benefits manager reported net earnings of $1.34 billion, or $1.27 a share, compared with a year-earlier $1.27 billion, or $1.16. Analysts in a Thomson Reuters poll were expecting just $1.19 a share.
Revenue for the three-month period climbed 8% year-over-year to $27.3 billion, matching the Street’s view. The gain was fueled by a 305,000 increase in new customers during the second quarter, led by retired customers.
Sales in the health benefit provider’s Medicare and retirement group climbed 12% to $10.1 billion with Medicare enrollment growing by 18% as baby boomers continued to retire.
“We remain focused on balanced growth, ever-improving service and execution, and practical innovation to better engage health care resources to serve more Americans, more affordably,” UnitedHealth CEO Stephen Hemsley said in a statement.
The improved revenues were padded by a 20-point year-over-year decrease in operating cost ratio to 15%. UnitedHealth attributed the decline to faster growth in revenues from services, products and fee-based benefits, as well as investments in the pharmacy-management services business. The insurer’s tax rate was also lower.
Shares of the Minnetonka, Minn.-based company, which is seen as a bellwether for the broader health benefits market, ticked more than 1% higher to $57 on Thursday following the announcement.