UnitedHealth Raises Outlook Following Strong Q1 Earnings

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UnitedHealth Group Inc. (NYSE: UNH) reported first-quarter 2016 results before markets opened Tuesday. The health insurance and benefits management firm reported adjusted diluted quarterly earnings per share (EPS) of $1.81 on revenues of $44.53 billion. In the same period a year ago, UnitedHealth reported EPS of $1.55 on $35.76 billion in revenue. Fourth-quarter results also compare to the consensus estimates for EPS of $1.72 on revenues of $35.76 billion.

For 2016, the company forecast revenues of approximately $182 billion and EPS in a range of $7.75 to $7.95. Cash flow from operations was pegged at up to $10 billion. UnitedHealth raised its EPS estimate by $0.15. Consensus full-year estimates called for EPS of $7.73 and revenues of $181.42 billion.

Total enrollment numbers increased year over year from 45.76 million to 47.67 million. Commercial enrollments rose from 29.43 million to 30.43 million. Medicare and Medicaid enrollment rose from 12.18 million to 13.18 million, and international enrollment slipped from 4.16 million to 4.07 million.

The consolidated medical care ratio rose by 0.3% to 81.7% for the quarter.

UnitedHealth repurchased 4.2 million shares of the company’s common stock for about $500 million in the first quarter at a weighted average price of $119 per share.

In the company’s UnitedHealthcare insurance business, revenues grew $3.3 billion year over year in the quarter and rose $3.1 billion sequentially. Profits were flat year over year and operating margin slipped from 5.8% to 5.2%. The company said the decline in margin was driven by increased quarterly costs from an extra calendar day of service and public exchange performance, partially offset by reserve development.

Shares closed up about 0.4% on Monday, at $127.81 in a 52-week range of $95.00 to $131.10. The stock was up 1% in Tuesday’s premarket session to $129.05. Thomson Reuters had a consensus analyst price target of $142.26 before the results were announced.