UnitedHealth beat second-quarter expectations as an acquisition and more Medicare Advantage customers fueled growth that balanced a jump in care use.
The health care giant also raised the low end of its 2023 earnings forecast range on Friday after its profit jumped 8% to $5.47 billion in the quarter.
UnitedHealth runs a health insurance business that covers more than 50 million people, mostly in the United States. It also has an Optum business that provides care and runs one of the nation’s largest pharmacy benefit managers.
Optum revenue jumped 25% to more than $56 billion in the quarter, helped in part by UnitedHealth’s roughly $8 billion acquisition of Change Healthcare, a deal that closed last fall.
The company also said it squeezed more revenue out of customers served through its Optum Health business by treating more people through value-based care arrangements. That business runs clinics, outpatient surgery centers and provides home care.
Value-based care involves basing doctor or care provider pay more on how a patient population does instead of delivering a fee for each service.
UnitedHealth leaders have been touting their growth in this area of care. Health care bill payers like the federal government have grown more interested in these arrangements as they try to keep people healthy and out of expensive hospitals.
UnitedHealth’s enrollment in Medicare Advantage plans also jumped 9% to 7.6 million in the quarter. The company’s UnitedHealthcare insurance business is one of the nation’s largest providers of Medicare Advantage plans, which are privately run versions of the government’s Medicare program mainly for people ages 65 and older.
That Medicare business also was a source of cost increases.
Shares of UnitedHealth and other insurers tumbled last month after an executive told a conference that the company was seeing a meaningful jump in outpatient surgeries that looked like pent-up demand being satisfied.
But overall, the company's numbers turned out better than expected. UnitedHealth reported adjusted earnings of $6.14 per share in the quarter as total revenue grew 16% to $92.9 billion.
FactSet said analysts expect earnings of $5.99 per share on $90.97 billion in revenue in the second quarter.
UnitedHealth also raised the bottom end of its forecast earnings-per-share range by 20 cents. It now expects adjusted earnings per share of $24.70 to $25 this year.
That puts the new range above the average analyst expectation of $24.70 per share.
Company shares climbed in premarket trading. Jefferies analyst David Windley said he expected the stock to recover some of its recent losses Friday.