| As of Tuesday, August 18th: |
Since the start of the quarter, the Q2 growth rate has risen from -31.1% to -27.9%. (Data provided by Thomson Reuters)
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UnitedHealth Group posted stronger-than-expected second-quarter profit on Tuesday, helped by growth in the insurer's plans for elderly and low-income Americans and in its drug benefit business.
Shares [UNH
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] rose 3 percent as the largest U.S. health insurer by market value also raised the low end of its 2009 earnings forecast.
UnitedHealth is the first health insurer to report second-quarter results, although Congress' efforts to overhaul the U.S. healthcare system may overshadow the industry's earnings season.
Net income rose to $859 million, or 73 cents per share, from $337 million, or 27 cents per share, a year earlier, when the company took a big charge for a legal settlement.
Analysts on average expected 70 cents a share, according to Reuters Estimates.
Revenue rose 6.8 percent to $21.7 billion.
Revenue in the company's Ovations unit serving seniors rose 13 percent to $8 billion. Enrollment in its Medicare Advantage plans jumped nearly 20 percent to 1.74 million.
At its unit serving Medicaid plans for low-income Americans, revenue shot up 45 percent to $2 billion, spurred by strong enrollment gains.
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"Medicare and Medicaid enrollment growth was strong," Wells Fargo analyst Matt Perry said in a research note.
The company's commercial plans for employers stood at 25.03 million at the end of June, down 1.46 million members from a year ago. UnitedHealth, along with other insurers, has seen membership declines as employers pare job rolls because of the weak economy.
Earnings from operations for its prescription drug benefit unit soared 77 percent to $166 million, helped by prescription volume growth and a shift to higher-margin generics.
"The story this quarter may be the huge earnings growth United reported in its prescription solutions segment,"
Oppenheimer analyst Carl McDonald said in research note.
UnitedHealth spent 83.6 percent of its premiums on medical osts, up from 83.2 percent a year earlier, but within company expectations. The H1N1 flu outbreak contributed 0.2 percentage points to the cost increase.
The ratio came in higher than the projection of Wall Street analysts, which closely watch it to gauge profitability.
The company's tax rate fell to 34 percent from 35.8 percent a year ago, as the company benefited from resolving federal and state tax matters.
The Minneapolis-based company forecast 2009 earnings of $3 to $3.15 per share, lifting the low end of its range by 10 cents.
UnitedHealth said on Monday that it would acquire the northeast U.S. operations of Health Net Inc for about $510 million to expand its presence in the region. The deal is expected to modestly boost UnitedHealth's earnings, the company said.
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Data is a real-time snapshot *Data is delayed at least 15 minutes