UnitedHealth Group today became the first publicly traded life and health insurer to post earnings for the second quarter, and its executives had to rush to explain that earnings for the next few quarters could look a lot different.
The COVID-19 pandemic caused the Minnetonka, Minnesota-based company’s net income to double, to close to $6 billion.
UnitedHealth offers pharmacy benefit manager services, data services, health care services and other services as well as health coverage.
COVID-19 forced many doctors and hospitals to suspend or limit normal operations from about mid-March to the end of May.
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That caused a sharp drop in volume at UnitedHealth units that provide health care or health care support services on a fee-for-service basis. The company was trying to protect its own workers by having many continue to work from home.
But the COVID-19 quarantine efforts also led to a sharp decrease in health care claim costs.
David Wichmann, UnitedHealth’s chief executive officer, said, during a conference call the company held to go over the results with securities analysts, that the results show the value of the company’s efforts to create an adaptable enterprise.
“We’ve witnessed our people helping in ways and advancing innovations and solutions at an unprecedented pace, scope and scale,” Wichmann said.
- Links to UnitedHealth earnings documents and conference call recordings are available here.
- An article about UnitedHealth’s earnings for the first quarter is available here.
UnitedHealth has waived all COVID-19-related diagnostic and treatment costs, provided over $1.5 billion in emergency assistance for consumers , provided $2 billion in accelerated payments for health care providers, and penciled in plans to make $1 billion in premium rebates, and it’s also helped state governments and employers set up about 500 COVID-19 testing sites, Wichmann said.
UnitedHealth also made money.
The company is reporting $6.7 billion in net income for the second quarter on $62 billion in revenue, up from $3.4 billion in net income on $61 billion in revenue for the second quarter of 2019.
The company’s UnitedHealthcare health insurance unit is reporting $7.1 billion in operating earnings for the quarter on $49.1 billion in revenue, compared with $2.6 billion in operating earnings on $48.6 billion in revenue for the year-earlier quarter.
Wichmann emphasized that the company expects health care claims to rise, and UnitedHealth’s profit margin to narrow, as use of care starts to return to normal levels.
The second quarter ended June 30.
UnitedHealth ended the quarter providing or administering health coverage for about 48 million people, down from about 49 million people a year earlier.
Here’s what happened to the number of people with key types of UnitedHealth health coverage between the end of the second quarter of 2019 and the end of the latest quarter:
- Risk-based: 8.1 million (down from 8.3 million)
- Fee-based: 18.7 million (down from 19.1 million)
- TOTAL COMMERCIAL: 26.8 million (down from 27.4 million)
- Medicare Advantage: 5.6 million (up from 5.2 million)
- Medicaid: 6.2 million (down from 6.4 million)
- Medicare Supplement (Standardized): 4.45 million (down from 4.5 million)
- TOTAL PUBLIC AND SENIOR: 16.3 million (up from 16 million)
- TOTAL DOMESTIC MEDICAL: 43 million (down from 43.5 million)
- International: 5.4 million (down from 6.1 million)
- WORLDWIDE TOTAL : 48.4 million (down from 49.5 million)
The Conference Call
Here are five things UnitedHealth executives said about the quarter during the company’s earnings call.
At this point, Wichmann said, commercial health plan enrollment has been reasonably stable.
Employers have been continuing health coverage for many furloughed workers, Wichmann said.
When stimulus efforts end, the pandemic could have a bigger effect on employer health plan enrollment, Wichmann said.
2. The Cost of Care
UnitedHealth executives noted that enrollees’ use of health care increased to about 95% of normal levels in June, from just 60% in April.
At this point, executives said, they worry that pent-up demand for care, and health problems caused or aggravated delays in use of preventive and routine care, could lead to a big increase in claim costs in the second half of the year.