UnitedHealth Group Inc., the biggest US health insurance company by sales, said third-quarter profit topped analysts estimates as more consumers chose to sign up for Medicaid under Obamacare.
The Minnesota-based company said third-quarter revenue grew 7%, up to $32 billion year-to-year. Net income also rose 7% to $1.63 per share, surpassing predictions of $1.53 earnings per share by 23 analysts polled by Bloomberg.
United Health adjusted its projection of yearly performance and said sales are expected to hit approximately $130 billion and net income to rise between the range of $5.60 to $5.65 earnings per share, compared to the previous estimate of $5.50 to $5.60.
Net margin in the third quarter was 4.9%, a slight decrease from 5.1% a year earlier and a 0.6% increase compared to the quarter ended June 30th.
The company’s results were boosted as more people signed up for Medicaid services under the Patient Protection and Affordable Care Act, which allowed less fortunate Americans to join the program. Since the beginning of the year people have shown growing interest in Medicaid.
“Our continued focus on fundamental execution in service to our customers is strengthening performance and momentum across our enterprise, and we are committed to accelerating that effort,” said Stephen J. Hemsley, president and chief executive officer of UnitedHealth Group.
During Q1 UnitedHealth registered 255 000 enrollments, in Q2 380 000 US citizens decided to join and 250 000 new patients in the third quarter, totaling a 885 000 new customers for the year so far.
“Medicaid is a huge driver of growth,” said Ana Gupte, an analyst at Leerink Partners LLC, in a telephone interview for Bloomberg. “They’re bringing more uninsured people. United is a leading Medicare service provider and clearly benefiting from the tailwind.”
The Affordable Care Act known as Obamacare is held responsible for the insurances of more than 10 million people, due to the creation of health exchanges and the expansion of Medicaid.
“We plan to grow next year as we expand our offerings to as many as two dozen state exchanges,” chief executive Stephen Hemsley said on a call with analysts. “This approach is consistent with our long stated plan to take a prudent first year position, and then build and expand in 2015 and 2016.”
UnitedHealth Group Inc. climbed 3.93% and closed at $85.39 on Thursday in New York. On Friday, the stock opened with yet another gap and closed 3.27% higher at $88.18, marking a 23.55% one-year increase. The company is valued at $85.68 billion. According to the Financial Times, the 22 analysts offering 12-month price targets for UnitedHealth Group Inc. have a median target of $95.00, with a high estimate of $121.00 and a low estimate of $77.00. The median estimate represents a 7.73% increase from the last price of $88.18.
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