MINNEAPOLIS _ UnitedHealth Group shares jumped 5.6 percent in trading Tuesday after the company's earnings increased 26 percent for the third quarter, beating analyst estimates and prompting a boost to full-year financial guidance.
The quarterly results were the first reported under new CEO David Wichmann, who took over the top job in September from longtime chief executive Stephen Hemsley.
During a conference call with investors, Wichmann said UnitedHealth Group, based outside the Twin Cities, would continue to focus investments going forward on its fast-growing Optum division for health services, including pharmaceutical benefits management, non-hospital health care and technology.
The company's UnitedHealthcare division is the nation's largest health insurer. This month, the benefits business announced expansions into the commercial markets in Maine and Minnesota.
"We recently decided to enter the Northern Plains health insurance markets, including Minnesota, beginning in the second half of 2018," said Steve Nelson, the UnitedHealthcare chief executive, during the call with investors. "Our team in Minnesota is looking forward to serving our neighbors more fully in coming years."
For the third quarter, UnitedHealth Group reported earnings of $2.49 billion on $50.32 billion in revenue, compared with earnings of $1.97 billion on $46.29 billion in revenue during the year-ago quarter.
After adjusting for one-time factors, its $2.66 earnings per share easily topped the $2.56 per share expected by analysts surveyed by Thomson Reuters.
UnitedHealth Group now expects adjusted net earnings for the year of about $10 per share, up from a previous range of $9.75 to $9.90.
At the end of the third quarter, nearly 45 million people in the U.S. were covered by UnitedHealthcare health insurance, up about 845,000 people, or 2 percent, from the year-ago quarter. Much of the growth came from the sale of Medicare Advantage plans to seniors, as well as supplemental Medicare policies.
During the third quarter, earnings from operations grew at a slightly higher rate at Optum than in the health insurance business, although both grew at double-digit rates.
At Optum, Wichmann said UnitedHealth Group is trying to "reinvent" the pharmaceutical benefits management (PBM) business with better technology and more transparency. Health plans hire PBMs to manage medication benefits for enrollees, including negotiations on the cost of drugs and the creation of pharmacy networks.
As a non-hospital provider of health care services in the U.S., Optum has large businesses in urgent care and outpatient surgery centers.
In Brazil, UnitedHealth Group sells health insurance while also operating hospitals and clinics. Last month, regulators in Chile disclosed the company is in the process of acquiring a health plan in the country that also operates in Colombia and Peru.
Going forward, UnitedHealth Group will make "selective" investments globally. The company will continue with smaller "plug-in" acquisitions in the health insurance business.
"The more significant investments that we'll make going forward, particularly on the growth front, will be through Optum, as we have in the past," Wichmann said.
UnitedHealth Group employs about 18,000 people in Minnesota.
