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UnitedHealth Shares Edge Higher On New Profit Forecasts

UnitedHealth said COVID costs will reduce its 2021 earnings, but the group still sees adjusted profits rising nearly 9%, with revenues nearing $280 billion.

UnitedHealth Group Inc.  (UNH) - Get UnitedHealth Group Incorporated Report shares jumped higher Tuesday after it issued an updated 2020 profit outlook, as well as a first estimate of its 2021 forecasts, ahead of an investor presentation later today.

UnitedHealth said it sees adjusted profits for the 2020 financial year 'approaching' $16.75 per share, a figure that compares to the estimate of $16.50 to $16.75 per share it published following its third quarter earnings in October. 

Adjusted earnings for 2021, UnitedHealth said, are likely to range between $17.75 and $18.25 per share, with revenues in the region of $277 billion to $280 billion, a 9% increase from the group's 2020 forecast. UnitedHealth said the 2021 forecasts include a hit of $1.8 per share that reflects costs linked to "accommodate continuing COVID-19 effects, such as: treatment and testing costs; the residual impact of people deferring care in 2020; and unemployment and other economic-driven factors. 

UnitedHealth shares were marked 3% higher in early trading Tuesday following the investor day update to change hands at $346.25 each, a move that would extend the stock's six-month gain to around 10%.

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UnitedHealth posted stronger-than-expected third quarter earnings on October 14 of $3.51 per share, on revenues of $65.1 billion, as Optum continued to pace gains for the health care provider.

UnitedHealth said third quarter earnings were led by Optum and the UnitedHealthcare public-sector and senior benefits businesses, even as the it saw "its expansive COVID-19 response efforts supporting patients, care providers, customers and communities."

Revenues at Optum, its pharmacy benefits management business, rose 21% to $34.9 billion while the division's bottom line rose 8.33% to $2.6 billion.