- UnitedHealth Group, parent company of the nation's largest private insurer, will maintain its 2020 outlook even as the healthcare sector faces unprecedented challenges in the fight against COVID-19, according to its first quarter earnings report.
- Executives also disclosed that members struggling to pay premiums and now using a payment plan or grace period represents 3% of the company's entire premium base, up from just 0.4% in a typical month. CEO David Wichmann said the company is "deeply committed" to providing premium relief to employer clients in the future, particularly if deferring elective procedures outweigh COVID-19 costs.
- The diversified healthcare firm spent the majority of its first quarter earnings call discussing and answering questions related to its response to the pandemic and the impact it's having on the company. The company said it has continued to employ and pay full wages to its workforce of 325,000.
As the first of its class to report first quarter earnings for 2020, the UnitedHealth report provides investors a window into how insurers are faring through the crisis that has halted the U.S. economy and thrown millions out of work.
At the same time, much of the COVID-19 activity in the U.S. began to accelerate toward the end of March, missing the majority of the first quarter.
Still, UnitedHealth Group reported that both revenues and earnings from operations increased from the prior-year period, which it said reflects broad-based revenue growth in its Optum and UnitedHealthcare units. UnitedHealth Group reported revenue of $64.4 billion for the quarter, up from $60.3 billion during the first quarter last year. Earnings from operations increased to $5 billion, up from $4.8 billion.
UnitedHealthcare, the insurance arm, said revenue growth was driven by Medicare Advantage plans. However, it saw membership declines in its employer book of business, noting it had 475,000 fewer members, missing analyst expectations for enrollment.
However, results did beat Wall Street with lower medical loss ratio (81%) for the quarter and earnings per share.
Separately, Optum CEO Andrew Witty, former chief executive at GlaxoSmithKline, announced he is taking a leave of absence to work with the World Health Organization on its COVID-19 vaccine development. The company said he will return to his position at the end of the WHO initiative.
So far in response to the pandemic, UnitedHealth has waived cost-sharing for COVID-19 treatment and it has accelerated $2 billion worth of payments to providers.
The insurer opened up a special enrollment period for those who had deferred to pick a plan through their employer-sponsored coverage, resulting in tens of thousands of taking advantage of that opportunity, the company said Wednesday.
To date, the Optum unit has directly treated more than 10,000 COVID-19 patients and is operating more than 400 test sites across the country.