UnitedHealth grows Q3 revenue, eyes 2019 expansion
UnitedHealth Group kicked off third-quarter earnings season Tuesday morning by reporting 12% increases in both revenues and earnings from operations year over year. The company beat expectations and finished the quarter with $56.6 billion in revenues and $4.6 billion in earnings from operations.
UnitedHealth's consolidated medical care ratio, also called the medical loss ratio, decreased 40 basis points to 81% in Q3. It attributed that decrease to the return of the health insurance tax.
The company raised its outlook for 2018 net earnings per share to about $12.10 instead of $11.80 to $12.05. The company now expects adjusted net earnings per share of about $12.80 rather than $12.50 to $12.75.
The largest commercial health insurer continues to grow and expects more expansion in 2019. UnitedHealthcare finished the quarter with nearly 49 million members, an increase of about 2.8 million. Membership growth over the past year came from Medicare Advantage, Medicare supplemental plans, risk-based commercial plans, individual plans and international customers, including its South America business.
The payer's revenues increased by nearly 13% to $45.9 billion. The revenue growth came from the increased membership, including more members in higher-acuity programs, pricing to cover medical cost trends and the health insurance tax.
UnitedHealthcare's employer and individual business revenues grew $680 million to $13.7 billion. Overall membership in that segment dropped, though. That came mostly from fee-based offerings falling by 245,000 members in Q3. As an example of how the payer is moving more into value-based contracting, UnitedHealth picked up 65,000 more members in risk-based offerings. About half of the company's medical spend is in value-based contracts with a goal of $75 billion in value-based contract in 2020.
Medicare and retirement segment revenues grew 15% to $18.8 billion. As the largest MA payer, it picked up another 525,000 people year over year and added 125,000 people just in the third quarter. The company ended the quarter with nearly 5 million MA members.
UnitedHealthcare CEO Steve Nelson said more than 50 million members will have an option of multiple MA plan offerings next year and more than 90% of the payer's MA membership will see no premium increase or decrease.
Nelson added that UnitedHealthcare continues to view MA as an "extraordinary growth opportunity."
CMS recently estimated an 11.5% membership growth for MA next year. Brian Thompson, CEO of UnitedHealthcare's Medicare and retirement segment, said the payer continues to think of growth more in the 7%-8% range, though he added that UnitedHealth has been able to beat that range in MA in recent years.
"We're optimistic about our products and what we're seeing in the marketplace," Thompson said about 2019.
UnitedHealthcare's community and state segment revenues increased by almost 18% to $11.1 billion. The company added 255,000 members to those plans over the past year but dropped 80,000 members in Q3. It lost 85,000 members in New Mexico after the Medicaid contract ended. Presbyterian Health Plan picked up those former UnitedHealth members.
Meanwhile, the payer's global revenues grew another 18% to $2.4 billion, which came through business expansion. UnitedHealth has increased its South America offerings through acquisitions.
UnitedHealth's Optum grew revenue by 11% to $25.4 billion. Its operating margin improved 60 basis points to 8%. Earnings from operations increased by almost 20% to $2 billion.
OptumHealth's revenues increased 15% to $6.1 billion. That was driven by growth in care delivery, behavioral health, digital consumer engagement and health financial services. OptumHealth grew 5 million members over the year and served 92 million people by the end of Q3.
OptumInsight's revenues also increased by 12.5% to $2.3 billion and OptumRx's revenues grew by 9.3% to $17.4 billion. OptumRx fulfilled 331 million adjusted scripts in Q3, up 3.1% from the previous year.
The company added that OptumRx improved its services for complex diseases by improving community pharmacy, telepsychiatry and specialty pharmacy services through acquisitions of Genoa Healthcare and Avella Specialty Pharmacy.
- UnitedHealth Group UNITEDHEALTH GROUP REPORTS THIRD QUARTER RESULTS