© Reuters. The UnitedHealth Group corporate logo appears on the side of one of its office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake
By Bhanvi Satija and Mariam Sunny
(Reuters) -UnitedHealth on Friday reported a third-quarter profit that beat analysts’ estimates due to lower-than-expected medical costs at the company’s health insurance unit.
Shares of the company, a bellwether for the health insurance industry, rose about 1% to $530 in premarket trading.
UnitedHealth’s (NYSE:) earnings beat and slight increase in annual guidance set the stage for quarterly earnings from other insurers in the industry that suffered a loss of nearly $60 billion in market value in June following the fears of rising medical costs.
Medical costs for health insurers have remained low in recent years as the pandemic and related restrictions caused prolonged delays in elective procedures such as hip and knee replacements, especially among older adults at higher risk of serious or serious illness. death from COVID-19.
However, UnitedHealth and Humana (NYSE:), the two largest providers of government-backed Medicare Advantage plans for people 65 and older, said in June that older adults were becoming more comfortable opting for these long-delayed surgeries. .
UnitedHealth reported its best quarter of the year, Jefferies analyst David Windley said, adding that initial fear related to high demand for outpatient surgeries was fading.
The company’s investment income of $997 million nearly doubled from last year and also contributed positively, according to Windley.
UnitedHealth’s third-quarter medical loss ratio, or the percentage of claims spending versus premiums collected, was 82.3%. That compares to 83.2% in the second quarter.
Analysts expected a ratio of 82.82% in the third quarter, according to LSEG data.
On an adjusted basis, UnitedHealth earned $6.56 per share, compared to estimates of $6.32.
Revenue from the insurance unit, the company’s largest, rose nearly 13% to $69.9 billion.
UnitedHealth also raised the lower end of its full-year adjusted earnings forecast for the second consecutive quarter to $24.85 per share from $24.70, and kept the upper end of its forecast at $25.00 per share.
Analysts had expected full-year earnings of $24.84 per share.
