- UnitedHealth Group bested Wall Street expectations and reported a lower-than-expected medical cost ratio of 81.9% for the third quarter as members continue to delay care amid the pandemic. Although utilization is not back to normal, it is hovering around 95% of pre-pandemic levels, considerably higher than the second quarter, executives said Wednesday.
- The payer's net income declined 10% to $3.3 billion in the third quarter compared to the prior-year period as a result of "extensive consumer and customer financial assistance measures," executives said during the third quarter earnings call.
- UnitedHealth generated revenue of $65.1 billion for the quarter, a nearly 8% increase compared to the third quarter of 2019, also beating consensus estimates. Health services arm Optum helped drive the growth.
So far the pandemic has been a boon for insurers as fewer patients seek care. But the companies have warned that while slumping volumes may benefit them now, a rebound, likely in the back half of the year, will drive up spending and subsequent medical cost ratios.
Though utilization improved during the third quarter, it is not back to its baseline, UnitedHealth executives said during Wednesday's call with investors.
OptumRx, the company's pharmacy benefit manager, reported prescription volumes were on par with last year's third quarter as the unit filled 325 million prescriptions, which is an increase of 9 million prescriptions from the second quarter.
Insurers have been sensitive to appearing like they're profiting off a deadly pandemic, and UnitedHealth said it has provided significant financial assistance to members.
For example, the payer peeled back copays for specialists and primary care visits for its Medicare members, as they were concerned that this cohort, many with chronic conditions, was avoiding care. Due to the positive response, UnitedHealth said it would be extending elements of eliminating copays into the fourth quarter.
The nation's largest commercial insurer reported its medical cost ratio of 81.9% was lower than the 82.4% it reported during the same period last year. It's still significantly up from 70.2% during the second quarter of this year, a period that experienced the deepest care pattern disruptions, according to UnitedHealth executives.
Medical cost ratio is an important measure as it details the amount a company spends on medical claims compared to the amount it brings in from premiums.
Despite historic levels of unemployment reached this year, UnitedHealth said it has yet to see a material increase in Medicaid enrollment due to job loss. Leaders expect a lag in Medicaid enrollment related to job loss by about six months.
However, the company still saw overall growth in Medicaid enrollment, which it attributed to states suspending redeterminations on Medicaid members.
The number of people served in commercial products did decline, attributable to cuts from large employers primarily in the hospitality, transportation and energy sectors, executives said.
UnitedHealth increased its guidance for the year, now expecting earnings per share to be in the range of $16.50 to $16.75 from $16.25 to $16.55.