Dive Brief:
- UnitedHealth Group Inc. announced higher than anticipated first-quarter earnings Tuesday thanks to its booming Optum health services division offsetting the insurer's losses from its Affordable Care Act health exchange business.
- The company's net income went up 14% to $1.61 billion, with adjusted earnings at $1.81 per share compared to the $1.72 per share previously predicted.
- UnitedHealth's revenue went up 25% to $44.53 billion, compared to previous revenue estimates of $43.9 billion.
Dive Insight:
The earnings news comes amid UnitedHealth's announcement it will leave at least 18 ACA markets in 2017. The company lost $720 million on ACA plans in 2015 and estimates it could lose up to $475 million this year.
However, UnitedHealth's Optum subsidiary is on fire, with an operating profit of $1.1 billion and a 54% jump in revenue to $19.7 billion, which equals 44% of UnitedHealth's total business.
Optum has a strong track record after generating almost $68 billion in 2015, up from almost $48 billion in 2014.
UnitedHealth made almost $20 billion in revenue from Optum, partially due to its acquisition of pharmacy benefits manager Catamaran Corp.