Medicare Advantage growth drives UnitedHealth's strong earnings

UnitedHealth Group's third quarter earnings from operations grew $502 million, or 12.3 percent, year-over-year to $4.6 billion, with strong revenues across both UnitedHealthcare and Optum, the company reported Tuesday.

An increase in membership in Medicare Advantage plans and growth in its business serving those with greater clinical needs helped spur UnitedHealthcare's $2.6 billion earnings from operations during the third quarter, compared to $2.4 billion during the same period the year before.

UnitedHealthcare's MA plans served 525,000 more people year-over-year, including 125,000 more in the third quarter.

An increase of 65,000 members was due to the insurer's acquisition of Peoples Health, a physician-owned Medicare Advantage organization in Louisiana.

UnitedHealthcare Community & State served 255,000 more people year-over-year, reflecting strong growth serving individuals with higher clinical needs, the company said. This was true even though membership decreased by 80,000 people in the third quarter due to the completion of the divestiture of UnitedHealthcare's plan serving 85,000 community-based members in New Mexico.

UnitedHealthcare Employer & Individual business grew to serve 65,000 more people through risk-based offerings in the quarter and 130,000 more people year-over-year. Fee-based offerings decreased by 245,000 people since last year, as the company said it was expecting.

In total, UnitedHealthcare grew to serve 2.8 million more consumers year-over-year in the third quarter of 2018.

Optum, the business services company, earned $2 billion from operations during the third quarter, up from $1.7 billion during the third quarter last year. Each business segment reported double-digit percentage earnings growth rates.

OptumHealth grew its care delivery, behavioral health, digital consumer engagement and health financial services.

OptumInsight had steady growth in data analytics product and service offerings and expanded its business process outsourcing and care provider advisory services. Its contract backlog of $15.7 billion grew $1.8 billion or by nearly 13 percent year-over-year.

OptumRx fulfilled 331 million adjusted scripts in third quarter 2018, growing 3.1 percent over the prior year, with a favorable mix in specialty pharmacy and home delivery services.

It also strengthened its services to patients being treated for complex diseases by adding capabilities in community pharmacy, telepsychiatry and specialty pharmacy services through the acquisitions of Genoa Healthcare and Avella Specialty Pharmacy.

WHY THIS MATTERS

UnitedHealthcare, the insurance arm of UnitedHealth Group, is the nation's largest insurer, setting the pace for how care delivery is paid. 

UnitedHealth Group's business services group Optum has virtually every payer and over 5,000 hospitals in its portfolio.

The company's financial results are grounded in applying three core competencies: information, technology and clinical insights, UnitedHealth CEO Dave Wichmann told analysts Tuesday, according to Forbes.

THE TREND

Numerous insurers are entering the Medicare Advantage business as the demographic grows and more seniors choose the private, over government insurance.

ON THE RECORD

"These results reflect our businesses delivering increased value at an accelerating pace to society and the millions of people we serve – one person at a time," said David S. Wichmann, chief executive officer of UnitedHealth Group.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com