UnitedHealth Group Inc. (NYSE: UNH) second-quarter earnings soared as the nation's largest insurer dove deeper into government-funded health coverage like Medicare and Medicaid and continued to distance itself from the turbulent Affordable Care Act insurance exchanges.
The insurer said on Tuesday that it drew $1.52 billion in operating earnings from its rapidly growing Optum business, which provides pharmacy benefits management and technology services and also operates clinics and doctor's offices.
Last summer, UnitedHealth reported that losses from that business had come in about $200 million higher than expected, and CEO Stephen Hemsley promised analysts that his company would have no meaningful exposure to the exchanges this year. The insurer is selling coverage on exchanges in only three states this year. United took a $1.8 billion revenue hit in the second quarter because of that pullback and a pause in a health insurance tax.
But that was more than offset by top line gains of $2.5 billion from the insurer's Medicare and retirement business and $2 billion from the Optum segment. United expanded quickly into the law's state-based insurance exchanges and was selling coverage in 34 states last year.
Overall, UnitedHealth's earnings jumped 30 percent to $2.28 billion in the second quarter. Adjusted earnings totaled $2.46 per share, and total revenue rose nearly 8 percent to $50.05 billion. Analysts expected earnings of $2.38 per share on $50.03 billion in revenue.
The insurer's total enrollment climbed 3 percent compared to last year's quarter, to more than 49 million people. The company said that it now expects 2017 adjusted earnings of between $9.75 and $9.90 per share. That's up from a forecast of $9.65 to $9.85 it made in April. Analysts expect, on average, earnings of $9.80 per share this year.
Shares of UnitedHealth Group Inc., a component of the Dow Jones industrial average, slid $1.47 to $184.88 in midday trading Tuesday, while broader exchanges also dropped.