UnitedHealth Group boosts outlook on profit jump

UnitedHealth Group solidly beat expectations for first-quarter earnings as the nation's largest health insurer added more than 1 million subscribers during the first three months of the year.

Growth at the company's UnitedHealthcare insurance division came from more memberships in Medicare Advantage health plans for seniors, as well as expanded coverage through employer and individual plans. Optum, the company's division for health care services, saw strong growth in revenue and earnings within its division for IT and data consulting services.

Overall, the Minnetonka-based health care giant increased its earnings outlook for the year, even as UnitedHealth Group continues to expect significant expenses from the COVID-19 pandemic. During the first quarter, the company paid for about 55,000 hospital admissions related to COVID-19, down from 65,000 admissions during the fourth quarter.

"In light of our strong start to the year, balanced with continued respect for the potential pandemic-related effects we have previously described, we are increasing our full-year adjusted-earnings outlook," said Andrew Witty, chief executive of UnitedHealth Group, during a call with investors.

UnitedHealth shares rose Thursday by nearly 3.9%, closing at $390.01. Thursday's quarterly earnings release was the first for the company since Witty was named chief executive in February.

For the quarter, UnitedHealth Group saw a profit of $4.86 billion on $70.2 billion in revenue. The earnings were up about 40% from $3.47 billion during the same period last year, while revenue grew by 9%.

Earnings per share of $5.31 beat by 93 cents the expectations of analysts surveyed by Refinitiv.

UnitedHealth Group and other health insurers saw a financial boost during last year's second quarter when the pandemic drove a shutdown of elective health care procedures. For several quarters, UnitedHealth Group has been watching for signs that these delays in care could result in patients with significantly worse and more costly health conditions when they return for care.

During the first quarter, however, the company still wasn't seeing that impact, said John Rex, the company's chief financial officer.

UnitedHealth Group continues to expect about $1.80 per share in expenses this year related to the pandemic, Rex said. About 70% of the costs are expected in the second half of the year. Use of health care in the first quarter was marginally below seasonal baselines, he said.

Elective care increased during February and March as sickness declined with fewer COVID cases although Rex said there has been some acceleration in pandemic-related health care in April. Use of health care for influenza has been down significantly, he added.

During the first quarter the company was able to complete nearly 600,000 "house call" visits by nurses to the homes of Medicare Advantage health plan members.

The tally was about four times the volume of last year's second quarter. Nurse visits have increased, Rex said, as more seniors are vaccinated and comfortable with in-person health care.

Following last year's annual open-enrollment period, membership in UnitedHealthcare's Medicare Advantage plans grew by about 625,000 people, or roughly 11%.

The insurance business in the first quarter also won a contract to manage care in Oklahoma health programs for lower-income residents.

Membership in UnitedHealthcare health insurance products in the U.S. now stands at 44 million people.

For the year, UnitedHealth Group expects adjusted earnings of $18.10 to $18.60 per share, up from the previous range of $17.75 to $18.25.

The company is Minnesota's largest health care company by revenue.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck