UnitedHealth beat first-quarter forecasts and hiked its 2023 guidance for the first time, pushed in part by more growth from its Optum care segment.
The health care giant said Friday that revenue jumped 25% from its Optum segment, which provides care and manages prescription drug benefits. Operating earnings from that part of the business also grew 19% to $3.7 billion.
The Optum business runs a growing number of clinics and urgent care and surgery centers. UnitedHealth says it served 103 million people in the first quarter.
Revenue per customer from that business jumped 34% compared to last year’s quarter. The insurer attributed that to its emphasis on value-based care. That involves basing doctor pay more on how a patient population does instead of delivering a fee for each service.
Health care bill payers like the federal government have grown more interested in these arrangements as they try to keep people healthy and out of hospitals.
CEO Andrew Witty told analysts on Friday that value-based care was crucial for customers with Medicare Advantage coverage.
UnitedHealth is one of the nation’s largest providers of Medicare Advantage plans, which are privately run versions of the government’s Medicare program mainly for people ages 65 and older.
UnitedHealth once mainly sold health insurance, and that’s still its biggest revenue generator. The company collected nearly $73 billion in premiums in the first quarter, a 14% increase compared to last year’s quarter.
The UnitedHealthcare insurance business covers more than 50 million people mostly in the United States. That business added customers in commercial coverage, Medicare Advantage and through Medicaid coverage that it manages for states.
Overall, UnitedHealth’s profit climbed more than 11% to $5.61 billion in the first quarter. Adjusted earnings totaled $6.26 per share on $91.93 billion in total revenue.
Analysts expected earnings of $6.16 per share on $89.7 billion in revenue, according to FactSet.
Medical costs, the company’s largest expense, climbed 14% to nearly $60 billion.
UnitedHealth now expects adjusted earnings this year to range between $24.50 and $25 per share. That range is a dime higher on both ends than initial guidance the company laid out late last year and reaffirmed in January.
FactSet says analyst forecast earnings of $24.93 per share.
Shares of Minnetonka, Minnesota-based UnitedHealth Group Inc. fell more than 2% to $512.66 Friday morning while the Dow Jones Industrial Average slipped. UnitedHealth Group is a component of the Dow.
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