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April 16, 2015 at 08:26 AM
(Bloomberg) — UnitedHealth Group Inc. (NYSE:UNH), the largest U.S. health insurer, raised its 2015 forecast and posted first-quarter profit that topped analysts’ estimates amid higher revenue from its Optum technology business. The shares jumped.
Earnings, excluding certain items, will be $6.15 to $6.30 a share, the Minnetonka, Minnesota-based insurer said Thursday in a statement. The company had said as recently as last month that 2015 profit would be $6 to $6.25 a share.
Growth at UnitedHealth has been fueled by the Optum business, which provides technology and consulting, and manages pharmacy benefits. Optum’s revenue increased 15 percent during the period to $12.8 billion.
“You’re getting double digit revenue growth pretty much across the board,” said Sheryl Skolnick, an analyst at Mizuho Financial Group Inc. “Despite absorbing the cost at OptumRx of the pending deal with Catamaran, it was pretty much of a monster quarter for Optum.”
To bolster Optum’s pharmacy business, UnitedHealth struck a deal last month to buy rival Catamaran Corp. for $12.8 billion. Firms like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. Optum now covers about 30 million people, and the Catamaran deal will add another 35 million.
First-quarter net income rose to $1.41 billion, or $1.46 a share, from $1.1 billion, or $1.10, a year earlier. Analysts had estimated $1.35 per share on average.
Shares jump
UnitedHealth is the first managed-care company to report first-quarter results. The shares rose 3.6 percent to $121.52 at 10 a.m. in New York, leading a rally among health insurers.
Aetna Inc. (NYSE:AET) advanced 2.6 percent, while Cigna Corp. (NYSE:CI) added 2.3 percent and Anthem Inc. (NYSE:ANTM) rose 2 percent. Humana Inc. gained 1.4 percent.
