UnitedHealth Group announced on Tuesday that its second-quarter revenues grew 8% year-over-year to $50.1 billion. Operations cash flow jumped 29% year-over-year to $2.2 billion in the second quarter and net earnings of $2.32 per share grew 28%.
The biggest jump was the UnitedHealth's technology company Optum, which saw its earnings grow nearly 21%.
Due to its strong first half, UnitedHealth said it raised its outlook for 2017 GAAP net earnings from a range of $9.20 to $9.35 per share to $9.75 to $9.90 per share.
UnitedHealth’s second-quarter numbers are a home run for the large healthcare company. CEO Stephen J. Hemsley pointed to new business and customer retention for the reasons behind the company's revenue growth.
The biggest winner was Optum, especially its health management, revenue management, consulting and pharmacy segments, but multiple areas showed improvement in the second quarter.
UnitedHealthcare, which is UnitedHealth’s insurance company, increased nearly 14% in the second quarter with $2.2 billion in earnings from operations. The payer has 2.5 million more members in its employer- and government-sponsored plans than a year ago.
It wasn't all good news for UnitedHealth though. The company’s withdrawals from Affordable Care Act (ACA) exchanges and ACA health insurance tax deferral cut revenues by about $1.8 billion and lowered the revenue growth rate by 4.5%, according to the company.
While pulling back on ACA exchanges, UnitedHealth is focusing more on its Medicare Advantage and other government offerings. UnitedHealth said its Medicare revenues grew by $2.5 billion, which is 17.2% year-over-year.
UnitedHealth already has the largest market share in Medicare Advantage. That size has brought greater scrutiny from the Department of Justice (DOJ), which joined two whistleblower lawsuits that involve alleged overpayments of Medicare Advantage. On Monday, UnitedHealth asked a federal court to dismiss one of the lawsuits.
Kip Piper, an expert on Medicaid, Medicare and health reform, recently told Healthcare Dive that he expects a “long, protracted and expensive battle” involving those cases. However, he doesn't think it will hurt UnitedHealth because it is “well-capitalized" and could cover a multi-billion dollar payment if the payer were to lose the lawsuits. If they were to lose the cases, Piper also doesn't think the CMS would restrict UnitedHealth's participation in Medicare Advantage or Part D because the restrictions would affect millions of beneficiaries.
Regardless, UnitedHealth can celebrate its second quarter. Another potential positive is that UnitedHealth may grow shortly. The company and Visa Equity Partners are reportedly looking to buy Advisory Board Company and split the consultant company’s health and education services. Pretty soon, UnitedHealth could play major roles in health insurance, technology through Optum and healthcare consultancy through Advisory Board.
UnitedHealth also reported strong first-quarter results earlier this year. The company reported $48.7 billion revenues in the first quarter, which was a 9.4% year-over-year increase, and was better than the more than $48.27 billion forecasted for the quarter.