(AP) — UnitedHealth Group’s third-quarter net income jumped 23 percent to trump expectations, as preparations for retiring Baby Boomers started to pay off for the nation’s largest health insurer. UnitedHealth also raised its 2012 earnings forecast.
The Minnetonka, Minn., company said Tuesday its Medicare and retirement revenue swelled by $1.2 billion, as Medicare Advantage enrollment grew by 400,000 people compared to last year.READ MORE: Minnesota Parents Want More School COVID Protocols As Cases Spike
Medicare Advantage plans are privately run, subsidized versions of the government’s Medicare program for the elderly and disabled people. UnitedHealth is the largest provider of these plans, and it made a couple acquisitions within the past year to help spur growth.
Big health insurers have been snapping up smaller Medicare Advantage plan providers to prepare for the millions of Baby Boomers who will become eligible for this coverage over the next couple decades.
Overall, UnitedHealth Group Inc. earned $1.56 billion, or $1.50 per share, in the three months that ended Sept. 30. That compares with $1.27 billion, or $1.17 per share, in last year’s third quarter.
Analysts had forecast earnings of $1.34 per share, and UnitedHealth said earlier this month its net income would be at least $1.45 per share.
Revenue rose 8 percent to $27.3 billion. That fell short of average analyst expectations of $27.58 billion, according to FactSet.
The insurer now expects 2012 earnings of $5.20 to $5.25 per share, up from a previous forecast for $4.90 to $5 per share. Analysts expected $5.13 per share.
UnitedHealth also said revenue from its community and state business, which includes Medicaid coverage for the poor and disabled, climbed 12 percent to $420 million in the third quarter.READ MORE: Missing Dog Makes It Home Safe After Being Stolen Along With Vehicle
The insurer also recorded a $390 million benefit in the quarter because claims leftover from prior periods came in lower than expected, which freed up money held in reserve.
Health insurance is UnitedHealth’s biggest business, but its Optum segment also provides services such as technology outsourcing and pharmacy benefits management. The company has touted that segment as an important source of future growth.
Optum’s total revenue came in flat at $7.2 billion, but its operating earnings climbed 28 percent to $408 million.
UnitedHealth is the first major insurer to report earnings every quarter, and Goldman Sachs analyst Matthew Borsch said in a Tuesday morning research note the report should set a positive tone for the sector, which also includes WellPoint Inc. and Aetna Inc. But the analyst also said next month’s presidential election will weigh more heavily on insurer stocks than earnings reports.
He said a victory by Republican presidential candidate Mitt Romney will lead to a “strong and sustained” insurer rally. Romney has said he plans to repeal President Barack Obama’s massive health care overhaul if he’s elected.
The overhaul is expected to add millions of new customers for insurers as the state-federal Medicaid program expands and people begin to receive tax credits to help them buy private coverage. But the law also taxes insurers and restricts how they provide coverage.
Shares of UnitedHealth, which became a Dow Jones industrial average component last month, fell $1.49 to $56 Tuesday in premarket trading.MORE NEWS: ATF Offers $5,000 Reward For Info Leading To Minneapolis Church Arsonist
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