UnitedHealth Group's third quarter 2019 profits rose 11% as the nation's largest health insurer ... [+]
UnitedHealth Group raised its profit outlook for the rest of the year as its Optum health services business continues to treat more patients in a value-based approach to capture more market share.
UnitedHealth Tuesday raised its 2019 net earnings outlook to “a range of $14.90 to $15” compared to an earlier forecast that was raised this past summer thanks to growth across its insurance and Optum medical provider businesses. The raised guidance came as the nation’s largest health insurance company reported an 11% increase in third quarter profits to $3.54 billion. Revenues jumped nearly 7% to $60.4 billion.
“Our business is progressing across multiple dimensions with many of our growth and performance efforts beginning to fall into place,” UnitedHealth chief executive officer David Wichmann told analysts Tuesday during the company’s third quarter earnings call. “Higher quality, better outcomes and experiences, lower costs (and) building the next generation health system in a socially conscious way. These have been and will continue to be consistent themes for our enterprise, an enterprise built for growth.”
UnitedHealth's strategy to offer both health insurance and a menu of healthcare services including pharmacy benefit management, surgical and outpatient care from the doctor’s office to the urgent care center via Optum is working. It has also been a recipe that is being followed by other health insurers after CVS Health, the operator of pharmacies and retail clinics, bought the nation’s third largest health insurer, Aetna, last year while other insurers like Humana are forming closer ties with medical care providers including Walgreens Boots Alliances and Walmart.
For UnitedHealth, the strategy included acquiring Davita Medical Group for $4 billion. That deal closed earlier this year and Optum executives said the integration is progressing.
UnitedHealth group said its OptumHealth business served about 95 million people as of Sept. 30 as “as revenue per consumer increased 30% year-over-year, driven by growth in value-based care arrangements and expanded local care delivery offerings.” OptumHealth’s revenues rose 34% to $2.1 billion in the quarter.
The growth in OptumHealth sales helped Optum’s overall revenues rise by 13% to nearly $29 billion. Optum’s overall sales includes the pharmacy benefit manager OptumRx, which is one of the nation’s largest PBMs.
“We are growing our physician base, applying data analytics and technologies, advancing collaboration, driving distinctive quality, and serving diverse payers to improve health outcomes at lower costs,” Optum chief executive officer Andrew Witty told analysts on Tuesday morning’s call. “We will further expand and deepen our local presence, aligning and integrating our capabilities across OptumCare as well as Optum more broadly in areas, including specialty pharmacy, behavioral health services and community-based pharmacy dispensaries.”
