UnitedHealth Q1 Results Top View; Lifts FY16 Forecast Above Market Consensus

(RTTNews) - Health insurer UnitedHealth Group (UNH) reported Tuesday higher profit in its first quarter, boosted by strong revenue growth in both UnitedHealthcare and Optum divisions. Adjusted earnings per share and revenues topped analysts' estimates. Citing the strong results, the company lifted its forecast for fiscal 2016 adjusted earnings and revenues, both above market view.

For the first quarter, net earnings attributable to shareholders increased to $1.61 billion from last year's $1.41 billion. Earnings per share were $1.67, higher than $1.46 a year ago.

Adjusted net earnings, which excluded certain items, were $1.75 billion or $1.81 per share, compared to $1.50 billion or $1.55 per share last year.

On average, 24 analysts polled by Thomson Reuters expected earnings of $1.72 per share for the quarter. Analysts' estimates typically exclude special items.

As expected, the first-quarter net margin of 3.6 percent decreased 40 basis points from last year's 4 percent, due principally to an increased level of pharmacy care services business.

Revenues climbed 25 percent to $44.53 billion from prior year's $35.76 billion. Analysts expected revenues of $43.96 billion for the quarter.

According to the company, the revenue growth was broad-based and reflected growing market demand for its product and service offerings.

Premiums increased to $34.81 billion from prior year's $31.67 billion.

UnitedHealthcare revenues grew 10 percent to $35.9 billion as it added 1.3 million more people domestically in the first quarter.

Revenues from Optum, a health services business, climbed 54 percent to $19.68 billion with strong growth in pharmacy care services. Revenue growth of 20 percent or more was reported at each Optum business.

The consolidated medical care ratio increased 30 basis points year-over-year to 81.7 percent.

Looking ahead, for fiscal 2016, the company now expects adjusted earnings per share between $7.75 and $7.95, a $0.15 per share increase from previous estimate of $7.60 to $7.80.

Earnings per share on a reported basis is projected between $7.20 and $7.40.

Annual revenues are now expected to be $182 billion, higher than previously expected more than $180 billion.

For the year, analysts expect earnings of $7.73 per share on revenues of $181.42 billion.

The company affirmed its outlook for strong cash flows from operations of up to $10 billion.

UnitedHealth shares settled at $127.78 on Monday, up 0.35 percent.