Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
July 16, 2015 01:00 AM

Lower medical spending, Optum boost UnitedHealth's second quarter

Bob Herman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    (This story was updated at 12:45 p.m. ET.)

    There appears to be no slowing down the country's largest health insurance company. UnitedHealth Group's profit soared by double digits in the second quarter, driven by higher membership, lower medical claims and large growth in its Optum business.

    Profit in the quarter jumped almost 13% to $1.59 billion, equaling $1.64 in earnings per share, beating Wall Street's estimates. Roughly 45.9 million people had a UnitedHealthcare plan as of June 30, a bump of 875,000 people year to date.

    Because of the company's earnings growth and the soon-to-be-completed acquisition of Catamaran Corp., UnitedHealth raised its outlook for the rest of the year. It now expects revenue of $154 billion by the end of 2015, a jump of $11 billion. UnitedHealth said earlier this year it was buying Catamaran, a pharmacy benefits manager, for $12.8 billion in cash and absorbing it within the Optum segment. The deal is now expected to close by the end of July.

    Every line of business recorded a jump in revenue, similar to the first quarter this year. UnitedHealth's government plans remained the largest area of growth on the insurance side.

    Medicare and Medicaid plans represented 60% of UnitedHealthcare's revenue, a reversal from the pre-Affordable Care Act era when employer-sponsored plans ruled the insurance industry. The Minnetonka, Minn.-based company has more than 3.2 million Medicare Advantage members, maintaining its place as the largest private Medicare insurer in the country. But that could change soon, as a potential Aetna-Humana merger would surpass UnitedHealthcare.

    UnitedHealth CEO Stephen Hemsley said on an investor call Thursday that he would not comment on the spate of deals occurring in the industry. In addition to Aetna and Humana, Anthem is pursuing a $54 billion acquisition of Cigna Corp., and Centene Corp. is buying Health Net for $6.8 billion. UnitedHealth was rumored as a buyer of Aetna or Cigna.

    However, the possibility of UnitedHealth buying a large insurance peer appears to be losing traction. Once the company completes its Catamaran deal, it will have a debt-to-capital ratio of 48%, which is far above the usual 25% to 35% that health insurers have generally targeted. UnitedHealth expects to reduce that debt total “in short order,” executives said Thursday, which may prevent the company from making a big move in the near term.

    Hemsley said that in the future UnitedHealth will “continue to diversify our business” and make moves as necessary.

    One of the few blemishes in UnitedHealthcare's quarter was a loss of 30,000 people in its individual health plans. The insurer added 570,000 ACA exchange customers during this year's open enrollment, but attrition of people paying their premiums led to the lower figure.

    Despite the overall membership gains and economic data that show much higher healthcare spending this year, UnitedHealth said its medical spending was down year over year in the second quarter. The company's medical-care ratio, which shows how much of premium dollars it is spending on healthcare claims, was 81.4%—a drop of 0.2% from the same period a year ago. That may be partially explained by the increased cost-sharing borne by the privately insured.

    Optum, UnitedHealth's consulting and technology services arm, is still the most profitable segment of the company. Optum works with hospitals, doctors, employers and other payers and healthcare groups on everything from data analytics to pharmacy management. Optum's revenue increased 16% in the second quarter to $13.6 billion. Its operating margin was 6.4%.

    UnitedHealth's total revenue for the first six months of 2015 hit $72 billion, a 12% spike from the first half of last year.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of 030821-Regionals-Highmark_WEB_i.jpg
    Highmark Medicare Advantage enrollment grows 12%
    insurers-digital-health-tools.png
    Pear Therapeutics in need of a financial lifeline
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing