UnitedHealth profit beats estimates, fuelled by Optum unit

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UnitedHealth Group Inc., the biggest U.S. health insurer, posted first-quarter profit that beat analysts’ estimates as results from its Optum technology and consulting business helped overcome losses on Affordable Care Act plans.
Although selling Obamacare plans represents a small portion of UnitedHealth’s revenue, the business has been under scrutiny because of its widening losses. The insurer plans to withdraw from at least five states for 2017 after selling coverage in 34 states for this year. The company said in December that it should have stayed out of the individual exchange market for longer.
Earnings were $1.81 a share, excluding some items, UnitedHealth said Tuesday in a statement, compared with the $1.72 average of 24 analysts’ estimates compiled by Bloomberg.
Net income rose 14 percent to $1.61 billion, or $1.67 a share, on revenue of $44.5 billion. Optum posted operating profit of $1.1 billion, up from $742 million a year earlier. fueled by the expansion of the pharmacy-benefits business with the acquisition of Catamaran Corp. in July. The company raised its 2016 adjusted earnings forecast to a range of $7.75 to $7.95 a share on annual revenue of $182 billion. Analysts had estimated adjusted earnings of $7.73 on average. The change was driven by taxes and accounting items.
UnitedHealth is the first health insurer to report results for the first three months of 2016. Analysts and investors will scrutinize the report for signs of how the entire health-care industry is faring.
UnitedHealth, based in Minnetonka, Minnesota, said it spent about 82 cents on medical costs for every premium dollar it took in during the first quarter.

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