Insurer UnitedHealth’s profit rises 26.3 percent

UnitedHealth, the largest U.S. health insurer, reported a stronger-than-expected quarterly profit along with also also raised its full-year earnings forecast, helped by strength in its pharmacy benefit management business.

UnitedHealth, the bellwether for the industry, is usually the first health insurer to report earnings a week after U.S. President Donald Trump decided to cut off subsidies to health insurance companies for low-income patients, his latest attempt to weaken predecessor Barack Obama’s signature healthcare law.

UnitedHealth had been immune to news involving Obamacare repeal efforts which year, in part as which largely pulled back by offering plans within the individual insurance exchanges due to mounting losses by the program.

“UnitedHealth rarely misses a step: the debut quarter for its completely new CEO had to be a Great one,” Mizuho Securities analyst Sheryl Skolnick wrote in a client note. The health insurer in August named David Wichmann its completely new chief executive.

UnitedHealth, which sells employer-based insurance as well as Medicare along with also also Medicaid, said net earnings attributable to shareholders rose 26.3 percent to $2.49 billion, or $2.51 per share, within the third quarter ended Sept. 30.

Excluding items, the company earned $2.66 per share, beating the average analyst estimate of $2.56 per share, according to Thomson Reuters I/B/E/S.

Revenue by its Optum business, which manages drug benefits along with also also offers healthcare data analytics services, rose 8.4 percent to $22.89 billion, accounting for nearly half of the insurer’s total revenue.

UnitedHealth’s total revenue rose 8.7 percent to $50.32 billion, yet narrowly missed analysts’ estimate of $50.35 billion.

The insurer said its withdrawal by individual insurance markets, combined that has a health insurance tax deferral, reduced third-quarter revenue by about $1.6 billion along with also also lowered the revenue growth rate by 4 percent.

“Despite a top-line hit of $1.6 billion … UnitedHealth beat … likely means a positive read-through for 2018,” Mizuho’s Skolnick said.

The company’s medical care ratio, or the percentage of premiums paid out for medical services, increased to 81.4 percent by 80.3 percent.

The medical care ratio is usually 100 basis points lower than Mizuho’s estimates, Skolnick said, adding which the cost trends remain favorable for UnitedHealth.

The company raised its full-year adjusted earnings forecast to about $10.00 per share, by $9.75-$9.0.

UnitedHealth’s shares were up 1.4 percent at $196 in light premarket trading.

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