UnitedHealth Group Inc.'s (UNH) CEO sees more tailwinds than headwinds ahead for the healthcare giant.
"As was the case heading into 2018, the tailwinds in our business are largely generated internally, coming from strong and diversified growth across our five distinct pillars, all aimed at achieving our longstanding mission," David Wichmann said on the firm's second-quarter earnings call on Tuesday, July 17.
The Minnetonka, Minn.-based company's five key areas are healthcare delivery, pharmacy care services, consumer-centric benefits, digital healthcare and global.
Wichmann said UnitedHealth will continue to invest in technology deployment and delivery system optimization, among others, in order to keep growing. "These investments also serve to lower our cost structures, improve [the net promoter score] and enable sustained growth and differentiated value for years to come," he said. The net promoter score is a measure of customers' willingness to recommend a company's offerings to others.
As for headwinds, the company expects the policy debate on coverage expansions and healthcare costs to continue into 2019, Wichmann said. In addition, he said the return of the health insurance tax in 2020 will result in "higher premiums and lower coverage levels for people." UnitedHealth, he said, will advocate on behalf of customers and consumers for a delay or repeal of the tax.
UnitedHealth on Tuesday reported second-quarter earnings that came in above estimates and revenue that was in line with expectations.
For the three months ended June 30, the company reported adjusted net earnings of $3.14 a share, up 28% from the year-ago period. Revenue rose 12% year-over-year to $56.1 billion. Analysts had projected, on average, adjusted EPS of $3.04 on revenue of $56.1 billion, according to Bloomberg.
For full-year 2018, UnitedHealth increased its net earnings guidance to the $11.80 to $12.05 per share range from $11.70 to $11.95 a share. It now expects adjusted net earnings to be in the range of $12.50 to $12.75 per share, compared with previous guidance of $12.40 to $12.65 a share.
Despite the results, shares were down 3.1% to $249.12 in morning trading. The company also reported that its medical loss ratio, or the percentage of premium dollars spent on claims and activities to improve the quality of healthcare, was 81.9% in the quarter, which may have concerned investors. Analysts had estimated, on average, a medical loss ratio of 81.8%, according to FactSet Research Systems Inc.