UnitedHealth Grows by 11.8% Despite ACA Marketplace Withdrawal
UnitedHealth posts double-digit Q1 gains in revenue and members even with reduced participation in the Affordable Care Act marketplace.
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By - Despite its very public near-total withdrawal from the Affordable Care Act marketplace in 2017, the nation’s largest healthcare payer recently reported substantial Q1 profit growth.
Revenues at UnitedHealth were up $4.2 billion to $48.7billion, an 11.8 percent increase from 2016.
In 2016, before it withdrew from the ACA marketplace, UnitedHealth posted Q1 growth of 25 percent over 2015 levels.
“Our focus on quality and consistency in everything we do for those we serve across the health system continues to strengthen our business each quarter. These efforts are driving consistent growth and strong bottom line performance across our businesses,” said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.
In Q1, the payer grew its membership by 1.5 million customers. When factoring in ACA marketplace losses, the company registered a net growth of over 730,000 new members. Leaving the marketplace resulted in a loss of 900,000 members.
However, revenue from the employer and individual market came out “essentially flat” from last year with revenues of $12.7 billion. The stagnant numbers the result of shuttering ACA members and the loss of accompanying tax deferrals.
The payer grew its combined subscriber base 2.5 million people in the year-over-year numbers thanks to its employer-based, Medicare, and international offerings.
The major component of profit growth came from double-digit earnings by nearly every division
Optum, which is UnitedHealth’s integrated information and technology business service, was a top performer. Optum is currently in use in 4 out of 5 US hospitals, and has been a growth engine for UnitedHealth. Optum Q1 revenues grew 7.9 percent to $21.2 billion. This included double-digit gains for every segment.
OptumHealth was up 18.4 percent to $4.7 billion, offering care delivery and financial services to 6 million additional customers.
OptumInsight, focused on revenue management and technology services, expanded 10.6 percent to $1.8 billion.
And OptumRx was up 4.7 percent to $14.9 billion. The pharmacy care service filled 322 million prescriptions, a 4.9 percent increase in volume.
The Medicare & Retirement sector grew by 17.7 percent from 2016 for a solid $16.6 billion revenue increase. Over 8.7 million seniors were UnitedHealth members, a 12 percent year-over-year increase. Q1 numbers put that at 760,000 more seniors, including 675,000 receiving benefits through employer-sponsored group and individual Medicare Advantage products.
The Community & State segment saw revenues grow by $1.2 billion, or 15.8 percent year-over-year. UnitedHealth cited sturdy membership growth and an increase in higher need beneficiaries for these gains. A total of 310,000 more people joined. The company stated it would “be implementing awards in California, Missouri, Nebraska and Virginia this year.”
With the promising Q1 results, UnitedHealth Group has raised its 2017 outlook, predicting revenues of approximately $200 billion. The company reported $184.8 billion in 2016. As of April 18, 2017 its Q1 adjusted net earnings of $2.37 per share were 31 percent over 2016.
