Despite losing tens of thousands of enrollees in its commercial and Medicaid plans, managed care company UnitedHealth Group Inc. (NYSE:UNH) reported $113 billion in revenue, up 12% year-over-year, and a profit of $4.3 billion during its third quarter results this week.
According to healthcare reform advocate Wendell Potter, this was driven in large part by premium hikes and increased payments from federal programs.
UNH is feeling the pressure from bearish momentum. Get the complete picture here.
Fueled By The ‘Generosity’ of Uncle Sam
In his Healthcare Un-Covered newsletter on Wednesday, Potter said that “if it were not for the incredible generosity of Uncle Sam, UnitedHealth would be a far, far smaller and less profitable company.”
He said that fewer than 20% of UnitedHealthcare's U.S. health plan members are enrolled in Medicare Advantage, just 8.4 million out of 45.8 million. The company, however, received $43.4 billion from the federal government to cover those Medicare enrollees, compared to $19 billion from its 29.9 million commercial plan members.
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“Almost exactly half of the $86.2 billion in revenues collected by the company's health plan division, UnitedHealthcare, came from the Medicare Trust Fund and seniors enrolled in its MA plans,” Potter said, adding that “All in all, 78% of UnitedHealthcare's health plan revenues now come from taxpayers.”
Potter, who once served as the vice president of communications at health insurance company Cigna Group Inc. (NYSE:CI), highlighted the hundreds of physician practices and health care facilities that UnitedHealth now owns, which he said, “has enabled the company to self-deal in ways that are not permitted by law in banking, real estate and other industries.”
“Increasingly, the health plan division is steering its enrollees to entities it owns or controls,” he said, noting that the percentage of the company’s total revenues, which it now categorizes as “intercompany eliminations,” has increased to 28%, from 27.4% a year ago.
UnitedHealth’s Beat-And-Raise Q3
UnitedHealth released its third-quarter results earlier this week, reporting $113.16 billion in revenue, up 12% year-over-year, and ahead of consensus estimates. It posted a profit of $2.92 per share, which was ahead of analyst estimates at $2.79 per share.
The company also raised its outlook for the year, now expecting an EPS $14.90, from its prior projection of $14.65 per share, while teasing its return to double-digit growth starting in 2027.
The stock was down 3.42% on Wednesday, closing at $355.26, and is down another 0.07% overnight. It scores poorly in Benzinga’s Edge Stock Rankings, but has a favorable price trend in the short and medium terms. Click here for deeper insights on the stock, its peers and competitors.
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