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UnitedHealth Group posts $4.9 billion profit in the first quarter, beating expectations

Revenues, profit and earnings per share all saw increases both month-over-month and year-over-year.

Jeff Lagasse, Associate Editor

(Photo by South_agency/Getty Images)(Photo by South_agency/Getty Images)

UnitedHealth Group beat industry projections by earning $4.9 billion in profit during the first quarter, according to an earnings report released Thursday. That's an increase of $3.4 billion from the same quarter in 2020.

Revenues hit $70.2 billion, up 9% compared to the first quarter of this year, when it posted $64.4 billion in revenues. UHG said its growth was "balanced" across subsidiaries UnitedHealthcare and Optum. Revenues grew 7.9% year over year, hitting $55.1 billion, a $4 billion increase from Q1 2020.

Based on initial 2021 business performance trends, UHG increased its full year net earnings outlook to $17.15 to $17.65 per share and adjusted earnings to $18.10 to $18.60 per share. This outlook continues to include about $1.80 per share in potential unfavorable impact to accommodate the continuing impacts of COVID-19, such as testing and treatment costs; the residual impact of people having deferred care in 2020; and unemployment and other economy-driven factors.

COVID-19 treatment and testing during the quarter was higher than expected, paired with higher elective care deferral patterns.

WHAT'S THE IMPACT

The results beat the expectations of Zacks Investment Research, which said in a report out Thursday that UHG has surpassed earnings per share estimates four times over the past four quarters, and revenue estimates three times in the past four quarters.

Overall, revenues topped Zacks' projections by 1.77%. UnitedHealth shares have added about 6.8% since the beginning of the year versus the S&P 500's gain of 10.3%, Zacks found.

UnitedHealthcare added more than 1 million customers during the quarter, driven largely by growth in community and senior programs as well as Medicare Advantage. Optum posted double-digit revenue growth, hitting $36.4 billion for a 10.8% year-over-year increase, and OptumHealth showed continued growth, with revenue per customer up 31%. In total, OptumHealth served 3 million more customers in Q2 than in Q1.

THE LARGER TREND

Optum and Change Healthcare announced in January their intent to merge, uniting two of the nation's largest technology and service companies in a $13 billion acquisition, but the move received pushback in March from the American Hospital Association, which said the proposed deal raises antitrust concerns.

In a letter sent to Acting Assistant Attorney General Richard Powers of the U.S. Department of Justice's Antitrust Division, AHA General Counsel Melinda Reid Hatton said the deal threatens to reduce competition for the sale of healthcare information technology services to hospitals and other providers. That, in turn, would negatively impact patients and providers, she wrote.

She claimed the proposed action would result in a large-scale consolidation of "competitively sensitive" healthcare data, and shift the data from Change Healthcare, a neutral third party, to Optum, a subsidiary of UnitedHealth Group. The insurance arm, UnitedHealthcare, is the largest health insurance company in the U.S.

The letter spurred an investigation by the U.S. Department of Justice later that month.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com