UnitedHealth Group Inc. lifted the lower end of its annual profit forecast as lower-than-expected-medical costs helped the company beat quarterly earnings estimates.
Full-year adjusted earnings will be $24.85 to $25 a share, the health insurer said Friday in a statement, an increase of 15 cents at the lower end of the range. Third-quarter profit was $6.56 a share, while Wall Street expected $6.32.
UnitedHealth is the first and largest managed-care company to report results and is seen as a bellwether for the sector. While its comments about an uptick in medical expenses earlier this year spooked investors, the third-quarter medical-loss ratio, a measure of how much premium revenue goes to pay for care, was just 82.3%, ahead of analysts’ view of 82.8%.
Some analysts said before the report that they expected any rise in medical costs to be manageable. “The leading carriers have enough agility to meet earnings expectations” despite increases in care expenses, RBC Capital Markets analyst Ben Hendrix said Oct. 9 in a research note.
The shares were little changed in trading before US markets opened. They’ve lost 0.9% this year through Thursday.
Revenue rose 14% to $92.4 billion, handily beating estimates.
