MA, Optum customers contribute to UnitedHealth’s strong Q3

Dive Brief:

UnitedHealth Group announced its third-quarter revenue grew by nearly 9% year-over-year (YOY) to $50.3 billion. Third-quarter earnings increased 14% YOY to $4.1 billion.
The company increased its full-year adjusted earnings to about $10 a share, which is an increase over the previous estimate of $9.75 to $9.90 a share, after beating analysts’ estimates.
During the earnings call, UnitedHealth, which has pulled back on the Affordable Care Act (ACA) exchanges, said it’s interested in President Donald Trump’s executive order last week, which included association health plans and expanding short-term catastrophic health plans.

Dive Insight:

The payer portion of the company, UnitedHealthcare, grew by nearly 10% YOY to $40.7 billion in the third quarter. The insurer covers 1.9 million more people across its employer-based, Medicare, Medicaid and international medical plan products than a year ago.

UnitedHealthcare grew by 540,000 members in the commercial group insurance market, but cutting back in the exchanges offset those gains and also cut into the company’s revenues. Revenues for employer and individual insurance decreased by $197 million YOY to $13.1 billion.

While UnitedHealth has pulled back on its ACA offerings, the company continues to find success in Medicare Advantage (MA). UnitedHealthcare, which is the largest MA payer with about one-quarter of the market, said its Medicare and retirement offerings increased revenues by 17% YOY to $16.3 billion. UnitedHealthcare added another 960,000 seniors to its coverage, a 12% increase YOY. That includes 105,000 more members in MA and Medicare supplemental products.

Those membership numbers will likely continue to grow in 2018. The

CMS recently announced

that overall MA enrollment is expected to increase by 9% to 20.4 million members next year. That will put MA enrollment at about one-third of Medicare enrollees. UnitedHealth sees potential in MA. In discussing MA’s growth opportunities in the past, UnitedHealth Group has predicted

eventually half of all Medicare beneficiaries

will have an MA plan.

Meanwhile, the company’s subsidiary Optum, which was the

biggest highlight of the second-quarter earnings

, also saw revenue growth in the third quarter. Optum’s revenues increased by 8% YOY to $22.9 billion and operating margins increased 50 basis points YOY to 7.4%. Optum earnings from operations grew 16%, and all Optum segments enjoyed double-digit percentage earnings growth. OptumHealth served about 90 million customers in the third quarter, which was 9 million more than last year.

With the earnings call coming on the heels of the president’s executive order, UnitedHealth CEO David Wichmann said the company has experience in a few areas the order addresses: association health plans, short-term health plans and health reimbursement accounts. Wichmann said the company will work with policymakers on those areas.

Regarding the other recent Trump announcement, UnitedHealth officials said the loss of cost-sharing reduction payments would likely not impact the company much because it has already pulled out of most of its ACA exchanges.

The earnings are the second bit of good news for the company this month. Earlier, U.S. District Judge John Walter of California’s Central District

threw out a whistleblower lawsuit

that alleged UnitedHealth received larger MA payments because of supplying false claims information. The federal judge said the Department of Justice, which is taking part in the lawsuit, didn’t show the insurance company knew the claims were false.

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