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Analysis

UnitedHealth Rebounds in Q2 With $4.7B in Earnings

By Jack O'Brien  
   July 18, 2019

UnitedHealth Group's core business continues to show resilience.

After a rocky beginning to 2019 on the New York Stock Exchange, UnitedHealth Group posted strong financials during Q2, according to its latest earnings report released Thursday morning.

The Minnetonka, Minnesota-based health insurer once again achieved total quarterly revenues north of $60 billion, buoyed by $4.7 billion in earnings from operations and adjusted net earnings per share of $3.60.

The insurer's quarterly cash flows from operations reached $5.9 billion, bringing the year-to-date total up to $9.1 billion. 

As a result of the Q2 financials, UnitedHealth is raising its year-end outlook on net earnings to a range of $13.95 to $14.15 per share and adjusted net earnings to a range of $14.70 to $14.90 per share.

Related: UnitedHealth Stock Has Bounced Back After a Rough First Quarter. Will its Positive Streak Continue?

C-suite perspective:

"Our results in the quarter reflect strong and balanced performance from both Optum and UnitedHealthcare and are driven by the 320,000 women and men of UnitedHealth Group who focus every day on creating value for those we serve," David Wichmann, CEO of UnitedHealth Group, said in a statement.

For the second consecutive quarter, UnitedHealthcare reported revenues greater than $48 billion, with $2.6 billion in earnings from operations.

UnitedHealthcare's metrics came after the subsidiary announced late last month that Dirk C. McMahon, president and COO of Optum, would take over after the retirement of CEO Steve Nelson.

Related: UnitedHealthcare Gets New CEO, as Execs Dance a Do-Si-Do

For its part, Optum maintained its strong growth pattern with $28 billion in revenues and $2.1 billion in earnings from operations, both year-over-year increases.

Prior to releasing its earnings report, UnitedHealth announced Wednesday morning that Optum would be taking over John Muir Health's information technology in an arrangement that allows the company to manage "all non-clinical work" for the California-based provider.    

Jeff Becker, a senior analyst at Forrester, told HealthLeaders that highlights of UnitedHealth's earnings report was the addition of 540,000 Medicare Advantage members year-over-year and its "multi-pronged strategy" focused on membership engagement and value-based contracting.

Related: UnitedHealth Beats Estimates With Solid Q1 Earnings

UnitedHealth did not lack strategic business activity during Q2, as rumors swirled that the company was one of two potential buyers for Magellan Health, according to a Business Insider. 

Wichmann displayed his faith in the company's forward-looking mission by purchasing 20,000 UHG stocks on May 3 for $4.6 million.

On June 20, UnitedHealth received approval from the Federal Trade Commission for the long-delayed $4.3 billion merger of DaVita Medical Group with its Optum subsidiary. Becker said this move is proof that UnitedHealth's vertical integration strategy is the "most comprehensive" in the market.

Days later, UHG announced the purchase of Equian LLC, a payments firm, for $3.2 billion, as well as PatientsLikeMe, a social network for patients with similar medical conditions.

ADDITIONAL UNITEDHEALTH Q2 EARNINGS REPORT HIGHLIGHTS:

  • After adding 800,000 people year-over-year in Q1, UnitedHealthcare reported that its membership declined 350,000 year-over-year in Q2.
  • OptumRx revenues rose to $18.9 billion, an 11.7% year-over-year increase.
  • UnitedHealth's Q2 dividend payments grew to $1 billion, while 6.4 million shares were repurchased for $1.5 billion.

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

Editor's note: This story has been updated to include commentary from Jeff Becker of Forrester.

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

The Minnetonka, Minnesota-based health insurer achieved total quarterly revenues once again north of $60 billion.

CEO David Wichmann said Thursday's results reflect "strong and balanced performance" from Optum and UnitedHealthcare.

As a result of the Q2 financials, UnitedHealth is raising its year-end outlook on net earnings.


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