UnitedHealth Group Inc , the largest U.S. health insurer, reported better-than-expected quarterly profit and revenue, helped by strength in its Optum business and an improvement in its medical care ratio.
The company also raised its forecast for 2016 adjusted net earnings to about $8.00 per share, from $7.80-$7.95.
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Revenue from the company's Optum business, which manages drug benefits and offers healthcare data analytics services, rose 9 percent to $21.1 billion.
The company said its consolidated medical care ratio, or the amount it spends on medical claims compared with the insurance premiums that it brings in, decreased 60 basis points to 80.3 percent in the third quarter.
UnitedHealth which also sells employer-based insurance as well as Medicare, Medicaid and Obamacare health plans, added that medical cost trends remained within expectations.
UnitedHealth's net earnings attributable to shareholders rose to $1.97 billion, or $2.03 per share, in the third quarter ended Sept. 30, from $1.60 billion, or $1.65 per share, a year earlier.
On an adjusted basis, the health insurer earned $2.17 per share, beating average estimate of $2.08, according to Thomson Reuters I/B/E/S.
Total revenue rose to $46.29 billion from $41.49 billion, slightly above analysts' estimate of $46.09 billion.
UnitedHealth along with Aetna Inc and Humana Inc have said they will pull back from the Obamacare individual insurance market in 2017, citing financial losses due to the costs of covering members who are sicker than expected.
The third-quarter results likely suggest that UnitedHealth has now largely ring-fenced the risk within the premium deficiency reserve, that it boosted in the second quarter, Credit Suisse analysts said in a note on Tuesday.
UnitedHealth's report often sets the tone for other health insurers.
Shares of UnitedHealth, which is the only large insurer not involved in any of the major consolidation deals under review by antitrust regulators, were up 1.4 percent at $136 in light trading.
Up to Monday's close, the company's shares had gained about 14 percent this year, compared with a 3.7 percent decline in the S&P 500 healthcare index .
(Reporting by Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta)