UnitedHealth's profit surges, yet Affordable Care Act drags
UnitedHealth's second-quarter earnings jumped 11 percent to top analyst expectations even though the nation's largest health insurer took another hit from coverage it sells largely on the Affordable Care Act's public insurance exchanges.
The Minnetonka company said Tuesday that losses from its ACA-compliant individual business came in $200 million above projections. That contributed to a drop in operating earnings in its largest business segment, UnitedHealthcare, which sells individual and employer-sponsored benefits.
UnitedHealth had said earlier this year that it was planning drastic cutbacks in its participation in the ACA's exchanges in 2017. The insurer sold coverage on ACA exchanges in 34 states this year but only plans so far to offer it in three next year: Nevada, Virginia and New York.
In addition, its new Harken Health subsidiary will sell coverage on exchanges in Chicago, Atlanta and South Florida.
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The exchange business and individual insurance coverage make up a small slice of UnitedHealth's total business.
UnitedHealth Group Inc.'s earnings jumped to $1.75 billion from $1.59 billion in the previous year's quarter. Adjusted results totaled $1.96 per share in the most recent quarter.
Revenue grew 28 percent to $46.49 billion.
Analysts expected earnings of $1.89 per share on $45.35 billion in revenue, according to a survey by Zacks Investment Research.
UnitedHealth shares have increased 20 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 6 percent.