UnitedHealth profit beats on lower-than-feared medical costs By Reuters


© Reuters. The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake

(Reuters) -UnitedHealth reported a third-quarter profit on Friday ahead of analysts’ estimates, helped by a lower-than-feared rise in medical costs at the company’s health insurance unit.

The healthcare conglomerate’s shares rose nearly 2% to $534.06 in premarket trading.

Insurers had benefited from a delay in non-urgent surgeries during the pandemic, with hospitals also grappling with staffing shortages.

However, both UnitedHealth (NYSE:) and Humana (NYSE:), the two biggest providers of Medicare Advantage plans for people aged 65 and above, had in June flagged an increase in long-delayed surgeries among older adults.

After a spike in demand for outpatient surgeries in the second quarter, the third quarter has shown a more “steady trend”, Stephens analyst Scott Fidel said ahead of the earnings report.

UnitedHealth said in July it expects medical costs for the third quarter to be “a little bit lower” compared with the second quarter.

The company’s medical loss ratio for the quarter, the percentage of spend on claims compared to premiums collected, was 82.3%, compared with 81.6% last year. Analysts had expected a ratio of 82.82%, according to LSEG data.

UnitedHealth’s revenue from premiums collected rose more than 12% to $72.34 billion in the third quarter.

Sales at healthcare services unit Optum, which includes UnitedHealth’s pharmacy benefit business OptumRx, rose nearly 22% to $56.7 billion.

On an adjusted basis, UnitedHealth earned $6.56 per share, compared with estimates of $6.32.

The company now expects full-year adjusted profit between $24.85 and $25.00 per share, compared with its previous outlook of $24.70 to $25.00. Analysts were expecting a profit of $24.84 per share.

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