UnitedHealth Group boosts outlook as quarterly profit exceeds $5 billion

UnitedHealth Group reported first-quarter earnings that exceeded $5 billion as the Minnetonka-based health care giant sold more Medicare health plans and saw revenue and earnings jump across its network of outpatient health care centers.

The results announced Thursday beat analyst expectations and prompted UnitedHealth Group to boost its financial outlook for the year.

The company operates UnitedHealthcare, the nation's largest health insurer. It also runs Optum, a division for health care services including Optum Health, which comprises clinics, urgent care centers and facilities for outpatient surgeries.

Last month, UnitedHealth Group announced a $5.4 billion deal to acquire a Louisiana-based home-care company, further expanding Optum Health's push into direct patient care.

"All of the core businesses of Optum, of UnitedHealthcare, have started the year well," chief executive Andrew Witty said during a call with investors.

Figures released Thursday show enrollment between December and March grew by about 6% in the company's Medicare Advantage plans, which allow seniors to receive their government-sponsored coverage through private health insurers. UnitedHealthcare is the nation's largest seller of Medicare Advantage plans, with nearly 6.9 million enrollees.

The Medicare Advantage growth offset a slight decline in commercial coverage, which consists primarily of health plans for employer groups. Overall in the U.S., UnitedHealthcare enrollment grew by 345,000 people between December and March, when total membership stood at nearly 45.5 million people.

Another 5.5 million people have UnitedHealthcare coverage outside the U.S.

For 2022, Optum Health expects to care for about 600,000 patients — up from an earlier estimate of 500,000 patients — under "value-based care" arrangements. Under this model, health care providers take a degree of financial risk for patient care costs and outcomes.

Optum Health's revenue grew by 34% over the same period a year ago. Earnings grew even faster, by 42%.

The number of patients served by Optum Health grew by 1% during the first quarter, which means per-patient revenue increased by one-third — a significant gain. Whereas Optum Health during last year's first quarter saw just over $125 in revenue per-patient, the figure this year jumped to nearly $167.

"This was driven primarily by the increasing number of patients served under value-based arrangements," said John Rex, the company's chief financial officer.

In value-based care arrangements, insurers in general give health care providers a budget to finance care for a group of patients, rather than paying a fee for each service provided. The contract terms encourage medical groups to manage care efficiently, insurers say. The agreements also include measures and goals for quality.

Health care providers that effectively manage the risk within value-based care contracts can make more money. Optum Health has these contracts with more than 100 health plans, including UnitedHealthcare.

During the first quarter, UnitedHealth Group closed on its purchase of Refresh Mental Health, a Florida-based company that provides financial and operational support to mental health care providers in 37 states. The deal is "helping us build out our behavioral delivery capabilities," Witty said Thursday, without disclosing financial terms.

In January, UnitedHealthcare provided coverage for 40,000 COVID-related hospitalizations, which was the highest one-month tally so far in the pandemic era, Rex said. In March, however, the company saw just 2,000 COVID-related hospitalizations.

Since the start of the pandemic, many patients have delayed services for other health care needs during COVID surges. UnitedHealth Group executives repeatedly have said they're watching to see if the delays result in worse health problems for patients.

"Thus far, we are not seeing the increasing acuity that many expected," Rex said. "For example, initial oncology-related diagnosis levels are consistent with historical averages."

For the quarter, UnitedHealth Group reported adjusted earnings of $5.03 billion, up about 3% over the year-ago period, on $80.15 billion of revenue. On a per-share basis, earnings came in at $5.49.

Analysts surveyed by Refinitiv were expecting earnings of $5.38 per share on $78.79 billion of revenue.

For the year, UnitedHealth Group now expects adjusted earnings of $21.20 to $21.70 per share, up from the previous guidance of $21.10 to $21.60 per share. Adjusted earnings exclude intangible amortization and other items management believes do not relate to underlying performance.

UnitedHealth Group is Minnesota's largest company by revenue, with about 18,000 employees in the state.