UnitedHealth clock in a first-quarter profit above estimates and raised its 2019 earnings forecast, driven by strength in its pharmacy benefit managing business and higher enrollment for its health plans.
The largest U.S. health insurer’s shares rose 2% to $235 in pre-market dealing.
The industry bellwether, which is the first health insurer to report quarterly results, raised its full-year adjusted earnings foretell to between $14.50 and $14.75 per share from its prior view of $14.40 to $14.70.
“We find this notable, as UnitedHealth has historically been reactionary in adjusting guidance early in the year,” Cantor Fitzgerald analyst Steven Halper said.
The health insurance sector recorded its brawniest weekly share price decline last week since March 2009, as worries persist over intended changes to the industry-wide system of rebates paid to insurers by drugmakers.
UnitedHealth continues to deliver consistent performance, but now the enquiry is whether any rebound in shares can be sustained amid the political overhang that has plagued the sector, Evercore ISI analyst Michael Newshel voted.
Optum, which is UnitedHealth’s fastest-growing unit, brought in sales of $26.36 billion in the quarter, a jump of nearly 12% from a year earlier.
The rake-offs, integral to the business model of pharmacy benefit managers (PBMs) like UnitedHealth’s Optum, have been a butt of the Donald Trump administration that has prioritized lowering prescription drug prices in the country.
The unit benefited from nurturing in its care delivery, behavioral health and health financial services, the company said.
Last year, rivals Cigna and Aetna blend with Optum’s two largest rivals, Express Scripts and CVS.
UnitedHealth’s medical care ratio, which compares bonuses with the cost of delivering medical care, worsened to 82%, from 81.4% last year, on deferral of the robustness insurance tax, the company said. Analysts on average were expecting 82.2 percent.
In the quarter ended March 31, net earnings attributable to UnitedHealth’s shareholders wake up 22.2% to $3.47 billion, or $3.56 per share, driven by the addition of 880,000 more members to its health plans.
The presence reported adjusted earnings of $3.73 per share, beating estimates of $3.60 per share, according to IBES data from Refinitiv.
Total gate rose 9.3% to $60.31 billion, ahead of estimates of $59.7 billion.