Skip to main content

Analysis

UnitedHealth Revenues Jump 7%, Optum Growth Leads the Way

By Jack O'Brien  
   October 15, 2019

The insurer's net earnings per share rose 17% year-over-year.

UnitedHealth Group boosted its year-end financial outlook after reporting more than $60 billion in total revenues during Q3, up 7% year-over-year, according to its latest earnings report released Tuesday morning.

UnitedHealth's operating earnings rose 9% year-over-year, cash flows from operations hit $12.3 billion, and net earnings per share reached $3.67, an increase of 17% compared to Q3 2018. 

On the whole, UnitedHealth reported a $5 billion profit during the quarter.

The Minnetonka, Minnesota-based insurer also benefited from the continued strong performance out of its Optum subsidiary, which reported $28.8 billion in revenues and $2.4 billion in earnings from operations.

These financials point to yet another strong quarter for UnitedHealth, which is raising the outlook full-year net earnings and adjusted net earnings by $0.15 per share.

Related: UnitedHealth Rebounds in Q2 With $4.7B in Earnings

Related: UnitedHealth, CHS Among Healthcare Winners and Losers in Q2

In light of the positive earnings, UnitedHealth's stock traded up more than 5.5% in early trading Tuesday.

C-SUITE PERSPECTIVE:

"Optum and UnitedHealthcare are driving value for our customers, creating momentum to finish the year strongly and move into 2020 with an intense focus on accelerating the growth of our businesses by advancing quality, affordability and satisfaction for those we serve," David Wichmann, CEO of UnitedHealth Group, said in a statement.

Like Optum, another one of UnitedHealth's subsidiaries produced strong metrics during Q3.

UnitedHealthcare achieved revenues of $48.1 billion and earnings from operations of $2.7 billion.   

Related: UnitedHealth's Stock Drops to Pace Dow Decliners, As It Heads Toward 6-month Closing Low

After an eventful Q2 of strategic moves, UnitedHealth took a much more measured approach in Q3.

However, one of the most notable developments was the company's ongoing feud with Team Health, a Knoxville-based hospital staffing and management company, over the cancellation of high reimbursement in-network contracts.

As was the case last year when UnitedHealth canceled contracts with Envision Healthcare, the insurer announced the planned cancellation of contracts with Team in 18 states between mid-October and July 2020.

In a Moody's report last month, the credit rating agency said UnitedHealth could set a new trend for other insurers to follow as a way to lower median reimbursement rates in certain geographic areas.

Related: UnitedHealth-Team Health Feud Could Have Broad Industry Impact

Jeff Becker, a senior analyst at Forrester, told HealthLeaders that UnitedHealth is eyeing about $500 million in potential savings through place of service selection next year.

Additionally, Becker noted that during the call there was a discussion of physician burnout reduction strategies and investment in digital tools like the company's provider portal, which he called "relatively unusual." 

ADDITIONAL UNITEDHEALTH Q3 EARNINGS REPORT HIGHLIGHTS:

  • One quarter after experiencing a year-over-year membership decline of 350,000 members, UnitedHealthcare reported that it added 450,000 members compared to this time last year.
  • OptumRx revenues rose to $18.5 billion, a 5.8% year-over-year increase.
  • UnitedHealth's Q3 dividend payments grew to $1 billion, while 2.6 million shares were repurchased for $600 million.

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


Get the latest on healthcare leadership in your inbox.