UnitedHealth posts 6% higher profit

UnitedHealth, the first major insurer to post second-quarter results, warns of a tough environment for its Medicare and Medicaid plans. (via LA Times)

UnitedHealth Group Inc. reported a 6% increase in second-quarter profit and raised its full-year outlook, but the nation’s largest health insurer warned about a tough environment for its Medicare and Medicaid plans as governments face more financial strain.

UnitedHealth Chief Executive Stephen Hemsley, in a conference call with analysts and investors, said that “there continues to be more downward than upward pressure across the healthcare landscape…. State budgets are clearly constrained for Medicaid.”

Industrywide, insurers have been pursuing more business through government health programs as commercial enrollment has slowed. In the second quarter, UnitedHealth said it added 210,000 Medicaid members nationwide.

The company’s shares Thursday fell $1.36, or 2.4%, to $54.99.

The Minnetonka, Minn., company said it earned $1.34 billion in the quarter, or $1.27 a share, compared with $1.27 billion, or $1.16, a year earlier. UnitedHealth said revenue in the quarter that ended June 30 grew 8% to $27.3 billion.

The company is the first major health insurer to report second-quarter results, and it’s considered an industry bellwether as rivals such as WellPoint Inc. and Aetna Inc. report later this month. UnitedHealth boosted its full-year profit estimate to a range of $4.90 to $5 a share, up from $4.80 to $4.95.

Analysts said they were encouraged by UnitedHealth’s outlook for medical cost trends to remain stable. The company said it expects a modest rise in costs in the second half of this year.

Patients cutting back on medical care and elective procedures during a weak economy has helped boost the bottom line for many insurers in recent quarters.

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Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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