Skip to main content

Analysis

UnitedHealth Beats Estimates With Solid Q1 Earnings

By Jack O'Brien  
   April 16, 2019

UnitedHealth Group started the year off on the right foot with continued revenue growth.

Minnetonka, Minnesota-based UnitedHealth Group bested its estimates for adjusted net earnings per share (EPS) and posted revenues just north of $60 billion during Q1 2019, according to its earnings report released Tuesday morning.

Against EPS estimates of $3.60, UnitedHealth posted $3.73 EPS, sending the company's stock up more than 3.50% in early morning trading. Additionally, the insurer's total revenues reached $60.3 billion, a 9% increase year-over-year.

Earnings from operations for the quarter were $4.8 billion, a 19% increase year-over-year, thanks to continued growth in the company's UnitedHealthcare and Optum subsidiaries.

UnitedHealthcare produced revenues totalling $48.9 billion, an increase of $3.4 billion compared to Q1 2018, while Optum registered revenues of $26.4 billion, up nearly $3 billion year-over-year. Optum, which recorded year-end revenues above $100 billion for the first time ever in 2018, also produced $1.9 billion in earnings from operations, a 13.6% increase year-over-year.  

Related: UnitedHealth Delivers Strong Q4 Earnings to End 2018

C-suite perspective:

"Our employees’ shared vision of improving the health of the people we serve and the performance of health systems for everyone is producing value for society and driving consistent growth for our businesses," David Wichmann, CEO of UnitedHealth Group, said in a statement.

Related: UnitedHealth Among Winners and Losers from Healthcare's Q4 Earnings Season

The insurer's full-year cash flows from operations were $3.2 billion, in line with the same metrics from Q1 2018. 

“UnitedHealth Group (A3 stable) reported solid growth in earnings, revenues and membership, which continues to support its strong credit profile," Dean Ungar, vice president of Moody's Investors Service, said in a statement to HealthLeaders on Tuesday. "Results were driven by growth in Medicare Advantage, stable medical costs and the operating margin benefited from the suspension in 2019 of the health insurance fee. Optum, the company’s health services subsidiary, continues to grow and perform well.”

One significant development for UnitedHealth during Q1 was a judge's decision to allow a former Optum executive to accept a high-level job at Haven, the Amazon-backed healthcare venture.

Another development was the company's decision to pass all discounts paid to PBMs on to consumers under UnitedHealth's employer-sponsored plan. 

ADDITIONAL UNITEDHEALTH Q1 EARNINGS REPORT HIGHLIGHTS:

  • As was the case in its previous two earnings reports, UnitedHealth raised its outlook for net EPS to a range of $13.80 to $14.05 per share.
  • UnitedHealthcare reported that its membership grew 880,000 year-over-year.
  • The insurer was boosted by OptumRx posting revenues of $1.7 billion, a 10.6% increase compared to Q1 2018, thanks in part to "increased script volumes and a higher mix of specialty drugs."

For complete financial information, review UnitedHealth's filing with the Securities and Exchange Commission.

Editor's note: This story has been updated to include a comment from Moody's.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: KIEV, UKRAINE - Dec 10, 2018: UnitedHealth Group Managed care company logo seen displayed on smart phone. - Image / Editorial credit: IgorGolovniov / Shutterstock.com


KEY TAKEAWAYS

Against EPS estimates of $3.60, UnitedHealth posted $3.73 EPS, sending the company's stock up more than 3.50% in early morning trading.

Overall, the Minnetonka-based insurer posted revenues north of $60 billion.

Earnings from operations for the quarter were $4.8 billion, a 19% increase year-over-year, thanks to continued growth in the company's UnitedHealthcare and Optum subsidiaries.


Get the latest on healthcare leadership in your inbox.