UnitedHealth Posts Robust Q3 Results On Solid Performance Across Divisions

UnitedHealth Group (NYSE:UNH), the largest health insurer in the U.S., announced its third quarter results Tuesday. The company posted strong figures for the quarter ending September 30, with revenues growing 12% over the prior year quarter to $46.3 billion and operating income rising 19% year over year (y-o-y) to $3.6 billion, driven by solid performance across divisions. Robust performance by the company’s pharmacy services business, Optum, also helped improve UnitedHealth’s operating margin by 40 basis points and net margin by 50 basis points over the prior year’s  quarter.

Buoyed by the overall strong quarterly results, the company slightly raised its guidance for full year 2016 and now expects to generate adjusted earnings of $8.00 compared to its earlier guidance of $7.80 to $7.95. Its guidance for consolidated revenue in full year 2016 remains the same at $182 billion.

Segment Performance

UnitedHealthCare: The UnitedHealthCare division posted revenues of $37.2 billion for the quarter, an increase of 13% y-o-y. This was primarily driven by a 4% increase in the number of customers served to 48.1 million. In terms of the bottom line, the division’s operating income grew about 13% to over $2 billion and operating margin was stable at around 5.7%.

Optum: Optum again reported solid results. Segment revenues grew over 9% y-o-y and operating income grew over 28% driven by growth across all three sub-segments – OptumHealth, OptumInsight, and OptumRx.

OptumHealth reported revenues of $4.3 billion, an increase of about 23% y-o-y, primarily driven by a 7% increase in customers served.

OptumInsight reported revenues of $1.8 billion, an increase of 15% on a y-o-y basis, driven by revenue management, business process outsourcing and technology services, and payer service offerings.

OptumRx, UnitedHealth’s PBM business, reported revenue growth of 6% y-o-y to $15.2 billion, driven by a 12% increase in script fulfillments.

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