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UnitedHealth boosts outlook and sees next year’s Covid-19 cost as less impact

UnitedHealth Group Ltd

UNH 4.13%

He raised his full-year outlook for 2021 and said the pandemic’s impact on the outcome was in line with expectations, with costs associated with Covid-19 offset by a slowing demand for selective medical treatment.

Health Insurance and Healthcare Giants, the first major company in the managed care industry, announced third-quarter results, adjusting for $ 18.65 to $ 18.90 per share and forecasting full-year 2021 earnings increase. Range from previous guidance.

UnitedHealth said the results are in line with previous projections on the impact of Covid-19 on 2021 profits. The company said the pandemic would hurt earnings of about $ 1.80 per share.

UnitedHealth also provided an early preview of the 2022 guidance. While analysts’ current consensus estimates are reasonable, Chief Financial Officer John Rex said they are likely to approach the upper limit of the company’s initial forecast of adjusted earnings next year. Analysts expect full-year 2022 net income to be $ 20.75 per share and adjusted earnings per share to be $ 21.64, according to a FactSet study.

UnitedHealth expects the impact of next year’s Covid-19 care costs to be smaller than in 2021, Rex said.

The CFO also said UnitedHealth will stick to its long-term forecast of annual earnings growth of 13% to 16%.

UnitedHealth CEO Andrew Witty, 56, didn’t participate in the earnings announcement because the company said it was an “urgent but easy procedure” for kidney stones last night. UnitedHealth said the process is going well and the CEO will be back in full duty in a few days.

According to the company, the increase in insured numbers and the expansion of the Optum health services business boosted growth in the third quarter.

Revenues for the quarter increased 11% year-on-year to $ 72.34 billion. The company’s earnings, excluding amortization and tax effects, were $ 4.52 per share. Analysts expected average revenue of $ 71.35 billion and adjusted revenue of $ 4.41 per share, according to a FactSet study.

Most of the revenue growth was due to a 12% increase in premiums of $ 56.97 billion.

The company’s UnitedHealthcare insurance business recorded an increase in membership from both more commercial customers and more members of the Medicare and Medicaid plans. The increase in membership, which has increased by about 2 million since 2020, has contributed to this year’s premium increase.

The company’s medical loss rate (watching the rate of medical expenses paid) was 83%, which was better than analysts expected.

According to Rex, UnitedHealth experienced about 60,000 Covid-19-related hospitalizations in the third quarter, peaking at about 30,000 in August and declining in September. Currently, about 5,000 people on UnitedHealth are receiving inpatient treatment for Covid-19-related symptoms, a reduction of about 50% compared to the highest levels seen during the quarter.

Delta variants increased cases during the summer in some parts of the country, especially in areas with relatively low immunization rates. Although there is an increase in some states, cases are beginning to decline in many of these areas.

Rex said that when Covid-19 became widespread, UnitedHealth continued to see patterns in which patients shifted down their routine medical care. According to UnitedHealth, the percentage of scheduled procedures such as colonoscopy and joint replacement is steadily returning to normal levels.

When asking a question, one analyst referred to an article in The Wall Street Journal on a recent report from the Federal Department of Health and Human Services’ Directorate General of Inspection. The report focused on risk adjustment, an important process affecting insurers’ payments under the Medicare Advantage program. Tim Noel, CEO of UnitedHealthcare Medicare & Retirement, said the company believes that risk adjustment models are valuable, “build and widely supported.”

Revenues from the company’s health services division, Optum, are also increasing. In the latest quarter, revenue increased 14% year-over-year, and revenue per customer increased as Optum expanded its services.

Optum’s pharmacy benefits arm, Optum Rx, saw a 6% year-on-year increase in prescriptions. This is another sign that more people are seeking medical care again after skipping a doctor’s visit last year due to a problem not related to Covid-19.

Write to Anna Wild Matthews (anna.mathews@wsj.com) and Matt Grossman (matt.grossman@wsj.com)

Correction and amplification
Tim Noel, CEO of UnitedHealthcare Medicare & Retirement, said the company believes that risk adjustment models are valuable, “build and widely supported.” Earlier versions of this article mistakenly attributed the statement to UnitedHealth President Dirk McMahon. (Corrected on October 14)

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UnitedHealth boosts outlook and sees next year’s Covid-19 cost as less impact

Source link UnitedHealth boosts outlook and sees next year’s Covid-19 cost as less impact

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