The first insurer to release details of its third quarter performance, UnitedHealth Group increased its 2012 outlook Tuesday after posting $27.3 billion in third quarter revenue, with 8 percent year-over-year growth.
Exceeding some Wall Street expectations, Minnetonka, Minn.-based UnitedHealth Group reported third quarter earnings of $1.50 a share and projected 2012 net earnings of $5.20 to $5.55 a share, up from July projections of around $5.
[See also: UnitedHealth to buy 90 percent stake in Brazilian managed care company]
UnitedHealth Group, the country's largest managed care firm, attributed the earnings to lower than expected claims and growing membership. UnitedHealth Group added 35,000 Medicare Advantage members and 70,000 Medicaid managed beneficiaries, and is set to manage care for 20,000 dual eligible beneficiaries in Ohio, part of a larger demonstration project with Aetna, Molina Healthcare and others having similar contracts.
UnitedHealth Group president and CEO Stephen Hemsley was keen to note the company's caution amid its healthy earnings, "given the weak business climate and employment outlook in the United States, the mounting pressures in federal and state budgets to mention just a few of the challenges."
The earnings are perhaps not hugely surprising to investors; UnitedHealth Group shares were up only marginally Tuesday, to $57.67. Either way, Morningstar senior equities analyst Matthew Coffina wrote that he thinks the firm "has positioned itself for success regardless of how the healthcare marketplace evolves... With underwriting and regulatory concerns fading to the background, we think UnitedHealth will continue churning out free cash flow."
Earnings for UnitedHealth Group's Optum company grew 28 percent over last year's third quarter. Optum has several brands in clinical care, informatics and consulting, and Hemsley pointed to recent business deals in a conference call. The company will measure in-market clinical performance for a specialty drug maker, consult a healthcare system on population health and risk management and offer several health plans integrated care services.
In early October, UnitedHealth Group announced it would spend $4.9 billion buying a 90 percent stake in Anil Participacoes S.A., Brazil's largest private insurer and operator of health clinics serving more than 5 million people.