* Q1 EPS $1.31 vs $1.17 Wall Street view
* Sees FY EPS $4.80-$4.95, up from $4.60-$4.80
* Shares rise 1.2 percent premarket
By Lewis Krauskopf
April 19 (Reuters) – UnitedHealth Group Inc posted a
higher-than-expected 3 percent rise in quarterly profit on
Thursday, benefiting from an increase in membership across its
health plans and lower-than-expected medical claims.
The largest U.S. health insurer by market value also raised
its full-year profit outlook, and its shares rose 1.2 percent.
Health insurers largely posted higher-than-expected profits
in 2011, driven by Americans’ low use of medical services as
they avoid doctor visits and procedures in a weak economy, and
Wall Street was eager to see if the trend has continued this
year.
Shares of UnitedHealth and its rivals have far outperformed
the broader market since the start of 2011.
However, several analysts said investors were expecting a
strong quarter and improved outlook from UnitedHealth, possibly
capping share gains.
Leerink Swann analyst Jason Gurda called the report “a
relatively solid quarter and increase in guidance, but
UnitedHealth has put up very strong first quarters in recent
years and expectations may be high.”
Investors also are concerned about the impact to the health
insurance industry from the U.S. Supreme Court’s decision on
President Barack Obama’s U.S. healthcare overhaul law, which is
expected in June. Such worries may prevent health insurance
stocks from significant gains during the first-quarter reporting
period, which UnitedHealth kicked off with its results.
UnitedHealth’s first-quarter net income rose to $1.39
billion, or $1.31 per share, from $1.35 billion, or $1.22 per
share, a year earlier.
The profit topped the analysts’ average estimate by 14 cents
per share, according to Thomson Reuters I/B/E/S.
Revenue rose 7 percent to $27.28 billion, slightly ahead of
Wall Street’s target.
Membership stood at 35.57 million at the end of March, up
about 5 percent from a year earlier.
The company spent 81 percent of its premiums on medical
claim costs, down from 81.4 percent a year ago. The spending was
also below the 81.9 percent expected by Susquehanna Financial
Group analyst Chris Rigg.
The first quarter “outperformance relative to our estimates
was driven by lower-than-expected medical costs,” Rigg said in a
research note.
The company raised its 2012 earnings forecast to a range of
$4.80 to $4.95 per share. Analysts have been looking for $4.84.
In February, UnitedHealth projected 2012 earnings of $4.60
to $4.80 per share, after closing its deal for privately held
Medicare specialist XLHeath Corp.
UnitedHealth shares have climbed 13 percent so far this
year, in line with the Morgan Stanley Healthcare Payor index
of health insurers.
