UnitedHealth Expects Medicare Membership Gains to Boost 2023 Profit

UnitedHealth Group beat Wall Street targets for quarterly profit and raised its annual forecast on Friday, as the healthcare giant banks on membership growth in its federal government-backed health insurance plans.

UnitedHealth is among the largest players in the Medicare Advantage market, where private insurers offer an alternative to the original Medicare – the federal government’s health insurance plan for people aged 65 and older or those with certain disabilities.

The industry bellwether’s strong Medicare outlook offers some relief at a time when health insurers are bracing to lose some members in their Medicaid plans – which cover healthcare costs for people with low incomes – as states remove pandemic-era guidelines to keep members continuously enrolled.

Medicare and Medicaid memberships make up a third of UnitedHealth’s health insurance business.

Shares of the Dow component were up nearly 1% at $530 before the bell.

Meanwhile, a slow recovery in non-urgent procedures helped lower medical costs at its insurance unit, driving the company’s first-quarter profit above expectations.

Health insurers stand to benefit as inflation and labor shortages threaten to hinder the number of non-urgent procedures that hospitals perform during the year, potentially leading to lower costs from medical claims.

The company’s medical cost ratio – the percentage of payout on claims compared with premiums – came in at 82.2%. Analysts had estimated 82.54%, according to Refinitiv IBES data.

UnitedHealth raised its adjusted 2023 profit forecast to between $24.50 and $25 per share, compared with its earlier estimate of $24.40 to $24.90 and market expectations of $24.94.

Excluding items, it reported a quarterly profit of $6.26 per share, beating estimates of $6.13.


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