Health insurer UnitedHealth Group Inc. said Tuesday that its second-quarter profit more than doubled as the prior-year period was weighed down by large lawsuit settlements and thinner margins in its health care services business.
The largest commercial health insurer by revenue also raised the low end of its full-year earnings forecast.
The news may bode well for the sector, as UnitedHealth Group is the first large health insurer to report quarterly earnings, and analysts see its performance as a bellwether for the industry.
UnitedHealth Group earned $859 million, or 73 cents per share, for the period ended June 30. That's up from $337 million, or 27 cents per share, a year earlier.
The year-ago period's results included settlements in two class action lawsuits related to UnitedHealth's former stock option granting practices that resulted in a pretax charge of $922 million, or 47 cents per share, for the quarter. Adjusted profit for the prior-year period was 67 cents per share.
Revenue rose 7 percent to $21.66 billion from $20.27 billion on increased premiums, which grew partly due to price increases. Services and products revenue also improved.
Analysts polled by Thomson Reuters forecast profit of 70 cents per share on revenue of $21.77 billion. Analysts' estimates typically exclude one-time items.
The company reported a membership decline in its UnitedHealthcare segment, losing 150,000 people served through fee-based programs and 260,000 people in risk-based health benefit plans. UnitedHealth Group said attrition at continuing clients was prompted by ongoing economic concerns, making up three-fourths of the total membership drop-off.
UnitedHealth Group serves more than 70 million people nationwide.
The Minnetonka, Minn.-based company boosted the low end of its full-year profit outlook. It now sees profit in a range of $3 to $3.15 per share. Prior guidance was for earnings of $2.90 to $3.15 per share.
Analysts predict net income of $3.07 per share for the year.
Peers WellPoint, Aetna Inc. and Cigna Corp. will report their earnings results later this month.