NEW YORK CITY (AP) — UnitedHealth Group hiked its 2019 forecast again after the addition of hundreds of clinics to its health care services business contributed to a better-than-expected third quarter.
The nation’s largest health insurance provider said Tuesday that it now expects full-year earnings of between $14.90 and $15 per share after previously raising its forecast in July.
Analysts expect earnings of $14.83 per share, according to FactSet.
UnitedHealth Group Inc. provides health insurance for more than 49 million people but also has been expanding well beyond that focus through its Optum segment. In June, the company completed a $5 billion deal to buy DaVita Medical Group clinics, as part of its push to move deeper into providing care.
Insurers say they are doing this to cut costs and make sure that people receive good care.
The company’s OptumHealth revenue jumped 34% in the quarter to $8.1 billion, also fueled by an expansion of behavioral health services.
UnitedHealth’s Optum segment also runs one of the nation’s largest pharmacy benefit management businesses and provides other services. Operating earnings from Optum jumped 20% in the quarter to $2.4 billion.
Operating earnings from the company’s health insurance side grew about 4% to $2.7 billion.
Medical costs, by far the company’s largest expense, grew 8% compared to last year’s quarter and topped $39 billion, but UnitedHealth said that trend remained within expectations.
Overall the insurer’s earnings jumped 11% in the quarter to $3.54 billion. Earnings, adjusted for one-time gains and costs, were $3.88 per share, which is 8 cents better than Wall Street was expecting, according to Zacks Investment Research.
Total revenue grew about 7% to $60.35 billion, also topping projections.
Shares of the Minnetonka, Minnesota, company climbed nearly 2% to $224.53 in early trading. But the stock was down about 11% so far this year, as of Monday’s close even though the Dow Jones industrial average — of which UnitedHealth is a component — has climbed nearly 15 percent.
Shares of insurers and pharmacy benefit managers have bounced around this year, as some Democratic presidential candidates have renewed a push for a “Medicare for All” plan that could replace private coverage and as Congressional committees investigated soaring drug costs.
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