UnitedHealth books another profitable quarter, raises 2015 outlook

UnitedHealth Group Inc. is rolling as one of the biggest winners in the Affordable Care Act era as the health insurer and services company posted significant gains across all lines of its business.

Profit jumped almost 29% year over year in the first quarter, totaling more than $1.4 billion. UnitedHealth's revenue increased 13% to $35.8 billion. First-quarter earnings per share were $1.46, beating Wall Street's consensus.

UnitedHealthcare, the company's insurance subsidiary, expanded its presence on the Affordable Care Act's insurance exchanges this year from four to 23 states. Executives said there was a "positive market response to the company's individual public exchange products," but did immediately disclose ACA plan enrollment.

Medicare Advantage revenue in the first quarter grew by 11%, but UnitedHealthcare's Medicaid segment grew by even more, 33%. Medicaid membership rose by 750,000 people year over year.

Despite the large growth in areas that have sicker patients, UnitedHealth's medical-loss ratio decreased year over year. The MLR was 81.1% in the first quarter, down 1.4% from the first quarter of 2014 and temporarily putting aside investor concerns that rising medical costs are eating into insurer profits.

UnitedHealth now covers 45.8 million people worldwide.

Optum Inc., UnitedHealth's health services and technology arm, increased revenue by 15% to $12.8 billion. Pharmacy benefits division OptumRx represented about two-thirds of that revenue, and it will become even larger after it closes on the $12.8 billion acquisition of Catamaran Corp.

UnitedHealth raised its year-end earnings per share target to $6.15 to $6.30, up from $6 to $6.25. Revenue is also expected to be $2 billion higher, totaling $143 billion.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.