New government customers deferring care led UnitedHealthcare's profits to rise 42% during the first quarter of 2021. Connecting these members to its parent's Optum physician facilities represents a growth area for UnitedHealth Group going forward, CEO Andrew Witty said during the company's first-quarter earnings call on Thursday.
"By better harnessing the collaborative capabilities of Optum and UnitedHealthcare, we believe we can develop new products and services and support people more effectively," Witty said.
The Minnetonka, Minn.-based health giant, which operates the nation's largest insurer, reported revenue growth of 9% year-over-year, with revenue coming in at $70.2 billion. Operating earnings came in at $4.9 billion, up 43% from $3.4 billion during the first quarter of 2020. The company credited the growth to continued deferral of care among UnitedHealthcare's 49.4 million members and the transition of OptumCare physician-owned facilities to value-based care relationships. CEO Andrew Witty said the company was investing heavily in its virtual capabilities and homecare tools to encourage members to see their physicians.
Here are five takeaways from UnitedHealth Group's first-quarter 2021 results:
1. Insurance subsidiary UnitedHealthcare reported revenue of $55.1 billion during Q1, up nearly 8% from $51.1 billion during the same period in 2020. The payer reported operating earnings of $4.1 billion, up 42% from $2.8 billion in 2020. The majority of the insurer's growth came from new government customers in Medicaid and Medicare Advantage: Medicare Advantage membership reached 6.3 million members, up 13% year-over-year; and Medicaid reached 6.9 million members, up 18% year-over-year. The company credited much of its growth to new Medicaid managed-care customers, particularly thanks to a new contract in Oklahoma. Commercial enrollment, meanwhile, dropped by 725,000 individuals, or 26.3 million total members, at the end of the first quarter.
2. Revenue at the company's Optum affiliate grew to $36.3 billion, up 10% from $32.8 billion during the same time the year prior. Operating income at Optum grew to $2.6 billion, up 24% from $2.1 billion the year. Witty reiterated that the company's growth strategy hinges on transferring its 56,000 physician practices—and counting—to value-based relationships. Of OptumCare's 20 million customers, 2 million are in global capitation arrangements, he said.
"We clearly see the capitation strategy as highly effective to deliver both quality and cost management for patients," he said.
3. The company estimates the COVID-19 pandemic will cut up to $1.80 from its earnings per share price for the year. Chief Financial Officer John Rex pointed to an inverse relationship among these patients—as coronavirus cases rise, routine patient visits to their doctors fall, leaving utilization levels essentially normal for the year. One area of concern remains that patients who deferred care will eventually suffer from more serious—and costly—illnesses. So far, Rex said that has not been the case.
"We have not yet seen that rising acuity in the populations that we serve," Rex said.
4. The company sees an opportunity to develop virtual products between its UnitedHealthcare customers and Optum facilities. OptumCare has already rolled out a virtual care product in every state that offers integrated in-person, virtual and home care. This product has been particularly popular among its behavioral health customers, who opt to conduct half of their visits digitally. Chief Operating Officer Dirk McMahon said he sees "tremendous opportunity" for new care models and products that connect UnitedHealthcare, OptumCare and other vendors in this area.
"We at UnitedHealthcare are going to be looking at that strongly," McMahon said.
5. The company offers Optum At-Home services to 10,000 UnitedHealthcare customers in six markets. It started offering these visits to the company's Medicare dual-special needs patients and is now adding its Medicare Advantage customers. Eventually, it aims to offer this program to other insurers' members.
