UnitedHealth's profit fuels health insurer stocks
Industry bellwether UnitedHealth blows away analyst expectations in the first earnings report under new healthcare rules. With video on insurance stocks.
Insurers were all doom and gloom about the healthcare overhaul, but things don't seem too bad for them today.
UnitedHealth Group (UNH), widely viewed as a bellwether for the industry, reported a better-than-expected 13% increase in profit for the first quarter. It was the first earnings report among large insurers under new spending rules from last year's healthcare law, Reuters reported.
Health-insurer stocks rose in response, with many hitting 52-week highs, as investors cheered the news. UnitedHealth's stock price hit a 52-week high of $48.90, but closed the day up 8% to $47.81.
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UnitedHealth reported a $1.35 billion profit, or $1.22 a share, up from $1.19 billion a year earlier. That blew away analyst expectations of 89 cents a share. Revenue rose 9.7% to $25.43 billion, far more than the $24.95 billion analysts were expecting.
Even more encouraging was UnitedHealth's guidance for the full year. Earnings will now be between $3.95 and $4.05 a share, with revenue approaching $101 billion, the company said. Previously, UnitedHealth had estimated earnings at between $3.50 and $3.70 a share and revenue at $100 billion.
The healthcare law gave health insurers minimum spending levels for patient care this year, and that was concerning to shareholders. But UnitedHealth has several things going for it, including enrollment growth and increasing margins. Membership hit nearly 34 million at the end of March, a 5% increase. And people didn't seem to need as many medical services as expected.
"It was a great quarter," one Gleacher & Co analyst told Reuters. "The question has been what is enrollment going to look like and what are medical costs going to look like. And I'd say this pretty much confirms, at this point at any rate, the best hopes that you could have had."
UnitedHealth earnings fueled a rise today among other health insurers. WellPoint (WLP) closed up 4.1%, Cigna (CI) rose 3.2%, Humana (HUM) rose 1.3% and Coventry Health Care (CVH) was up 3.5%.
I nearly won the lottery last week. I only missed it by 5 numbers.
It is all about managing with mathematics/algorithms and the shining star in their 1st quarter as stated by the CEO is their IT investments, Ingenix, which is now called OptumInsight with their name changes and they have patents now for those algorithms and thus we need a department of algorithms to certify carriers and their formulas just like we do the electronic medical record vendors, only fair. The big change too here is the fact that healthcare for people is being handled like transaction and severe ethic problems are present with such paradigms and accounting.
Soon the UK is going to get a taste of this as well.
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