UnitedHealth Group beat forecasts for its earnings in the third quarter, and the U.S.’s largest health insurance provider finally hiked its 2020 outlook after holding off while trying to sort out COVID-19s impact.
Health insurers had approached 2020 forecasts cautiously so far this year, even though many reaped huge profits in the first half as the spreading pandemic kept people home and out of the health care system.
Both analysts and insurers have said they expected medical costs to rise in the second half of the year, as communities that had shut down opened back up and people felt more comfortable seeking elective surgeries.
UnitedHealth said Wednesday that both care patterns and prescription volumes approached normal levels in its recently completed quarter. The company now expects adjusted net earnings to range between $16.50 to $16.75 per share for 2020.
Thats up from a forecast it first laid out late last year for 2020 earnings of between $16.25 and $16.55 per share. UnitedHealth usually raises its forecast a couple times during the year.
The new range mostly exceeds the average forecast on Wall Street for earnings of $16.57 per share, according to FactSet.
Based in Minnetonka, Minnesota, UnitedHealth Group Inc. runs a health insurance business that covers about 48 million people, mostly in the United States.
Its Optum segment also runs one of the nations largest pharmacy benefit management operations as well as a growing number of clinics and urgent care and surgery centers. Operating earnings from that segment grew 8% to $2.6 billion in the quarter.
Overall, the companys net income dropped 10% to $3.17 billion in the quarter, due in part to costs tied to the pandemic.
The company booked medical costs from COVID-19 care and testing. It also gave some customers premium breaks and temporarily waived fees like co-payments for doctor visits.
In addition to that, UnitedHealth’s commercial insurance enrollment, which includes employer-sponsored coverage, slipped. Many companies laid off workers earlier this year as the pandemic spread in the U.S. and the economy slowed down.
UnitedHealth’s adjusted earnings totaled $3.51 per share in the third quarter. Total revenue rose about 8% to $65.11 billion.
Analysts expected, on average, adjusted earnings of $3.10 per share in the quarter on $63.79 billion in revenue, according to financial data provider FactSet.
Company shares edged up about 1% to $334.51 in early-morning trading Wednesday.
Shares of UnitedHealth, a Dow Jones industrial average component, have hit several all-time high prices so far this year.
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Follow Tom Murphy on Twitter: @thpmurphy
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