UnitedHealth profit up amid Aetna speculation
The strong earnings report -- which beat Wall Street expectations -- comes as the for-profit insurer is reportedly weighing a bid to acquire rival Aetna.
Insurance giant UnitedHealth Group (UNH) reported stronger profit and revenue for the second quarter of 2015 while speculation continues that the company is pursuing a bid to acquire rival Aetna (AET).
UnitedHealth beat Wall Street expectations as the company's Optum technology and services division surged and the company added patients.
Minneapolis-based UnitedHealth recorded net earnings of $1.59 billion for the quarter, up 13% compared to the same period a year earlier. Total revenue increased 11% to $36.263 billion.
The strong earnings report comes as the for-profit insurer is reportedly weighing a bid to acquire rival Aetna.
In a conference call with investors, UnitedHealth CEO Stephen Hemsley declined to comment on what he described as the "exceptionally active" merger-and-acquisition rush in the insurance business.
But he noted that the company will "continue to deploy capital in ways that we think make sense for us."
UnitedHealth announced in March that it would acquire pharmacy benefits manager Catamaran Corp. in a deal valued at about $12.8 billion. Larry Renfro, CEO of the Optum division, said the Catamaran deal is expected to close within the next two weeks.
"We have been building our business and diversifying our businesses across landscape of our business model for several years and we can expect to continue those approaches," Hemsley said.
Consolidation in the health care business is accelerating as insurers grapple with the effects of federal health care reform.
UnitedHealth got a big boost from its Optum unit, which provides data analytics, cost analysis and consumer experience consulting. Optum's revenue surged 16% to $13.6 billion, now representing about 37.5% of the company's sales.
The company added 1.6 million insured patients over the last year, bolstering the bottom line.
UnitedHealth Group said that its operating earnings before income taxes rose 15% to $2.74 billion.
Still, investors shrugged. The stock, which has surged in recent months, was down about 1% in mid-day trading.
Loo said the market might have been a little disappointed in the company's higher-than-expected medical-cost ratio, a gauge of the percentage of health care premiums insurers spend on reimbursement. That figure was 81.4%, compared to expectations of 80.8%.
"But quite honestly I’m not overly concerned about the medical cost scenario at this point," Loo said.
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.