UnitedHealth Group revenues grew 8% in the third quarter, but earnings declined

UnitedHealth Group revenues of $65.1 billion grew 8%, led by 21% growth at Optum, but earnings dropped in a year-to-year comparison of the third quarters.

For 2020, third-quarter earnings from operations of $4.7 billion compare to $5 billion last year during the same time period. 

The decline reflects consumer financial assistance measures, as well as COVID-19 care and testing costs and broader economic effects, the company said in its Q3 earnings report today.

UnitedHealth Group is supporting vaccine and antibody trials, CEO David Wichmann said. 

The company is working with local and state leaders nationwide to expand testing and contact tracing, is assisting communities in such efforts as mental health support, and is investing and partnering with research institutions to improve outcomes for minority populations affected during the crisis, the company said. These expenses were partially offset by a reduction in care costs, as members deferred care due to the pandemic.

UnitedHealth Group is seeing less disruption in deferred care during the third quarter than during the second as regions stabilize, according to CFO John Rex. Both UnitedHealthcare's Medicare Advantage and Medicaid businesses are growing.

When Medicare open enrollment starts tomorrow, 2021 is expected to represent the largest enrollment year for Medicare Advantage, the company said. 

"We expect strong growth in individual Medicare Advantage," Wichmann said.

Medicare Advantage activity became more normal after the second quarter.  Seniors love the House Calls program, which experienced a 30% jump over last year, executives said.

During the third quarter, the Medicaid market has accelerated, but the company hasn't seen enrollment growth due to job losses, Rex said. There's usually a six-month time lag between unemployment and Medicaid enrollment.

The company is expected to have Medicaid membership gains in 2021 through entry into Kentucky, Indiana and North Carolina, and expansion in Nebraska, along with growth in existing states and continued increases in dual special-needs plans.

UnitedHealthcare public-sector and senior program revenues grew by 9.7% year-over-year in the quarter, while commercial revenue was impacted by member attrition due to economic factors. Growth is expected from commercial market expansion in specialty benefits and new provider-led benefit plans.

New surgeon affiliations for OptumCare rose 25% over last year, with telehealth use among Optum physicians growing to one million virtual visits.

Strong growth is expected for OptumHealth, driven by further expansion of people served in value-based care arrangements. 

WHY THIS MATTERS

Insurers have realized higher gross profits and margins due to spending less on deferred and routine care during the pandemic. Rex said the deferred-care costs have been more than offset by company-assistant actions during the COVID-19 pandemic.

Care utilization is currently at 95% of baseline, Rex said, compared to two-thirds of baseline during the second quarter, the deepest period of care deferral.

THE LARGER TREND

UnitedHealth Group is usually the first large insurer to report earnings.

As the nation's largest insurer, UnitedHealthcare's financial outlook is often a reflection of the market nationwide.

Anthem will hold its third quarter earnings call on October 28, Humana on November 3, Cigna on November 5 and CVS Health, which owns Aetna, on November 6.

ON THE RECORD

"The people of UnitedHealth Group continue to deliver more innovative and modern solutions for customers, physicians and consumers while responding to the needs of the people and communities affected by the pandemic," said CEO David S. Wichmann. "We're encouraged to see those we serve respond to the incentives we offered to safely seek care as the health system continued to recover in the quarter."

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