Dive Brief:
- UnitedHealth Group's first-quarter profits topped analyst estimates, and the company raised its 2015 forecast. The health insurer's operating profit jumped to $1.9 billion from $1.4 billion a year ago.
- A lot of the company's growth can be attributed to its Optum technology business, which provides technology and consulting, and manages pharmacy benefits.
- Last month, UnitedHealth bought rival Catamaran Corp. for $12.8 billion in an effort to bolster Optum's pharmacy business. Yet despite absorbing the costs of the pending deal with Catamaran, Optum's revenue increased 15% during the period to $12.8 billion.
Dive Insight:
On Wednesday, HCA Holdings announced increases in admissions and emergency department visits, causing some to wonder if health insurers' medical spending would jump. Not at UnitedHealth, apparently: "Somebody bore the cost of HCA's historic volume," said Sheryl Skolnick, an analyst at Mizuho Financial Group Inc. "It wasn't United."
Skolnick called it a "monster quarter for Optum," noting that the company saw "double digit revenue growth pretty much across the board."
UnitedHealth is the first managed-care company to report first-quarter results, and shares rose 3.7% in response; other insurers also saw share increases. Aetna Inc. advanced 3.2%, Cigna Corp rose 2% and Anthem Inc. rose 2.4%.
UnitedHealth has also benefited from coverage expansion under the Affordable Care Act, even though profit margins are narrower in government-funded programs, such as Medicaid.