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VOL. 39 | NO. 15 | Friday, April 10, 2015

UnitedHealth hits all the notes, shares head for new heights

The Associated Press

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UnitedHealth hiked its 2015 forecast after soaring past Wall Street's first-quarter expectations with a performance fueled in part by growth outside health insurance.

Shares of the nation's largest health insurer climbed toward another all-time high before markets opened Thursday and after it said it now expects annual earnings of $6.15 to $6.30 per share, up from a forecast of $6 to $6.25 per share that it made late last year.

Analysts had been expecting $6.21 per share for the year, according to FactSet.

UnitedHealth also raised its revenue forecast as the Minneapolis company's first quarter backed up an optimistic vibe that company executives exuded in January, when they said the insurer was carrying momentum into 2015 from a strong finish last year.

The company's Optum segment helped sustain that momentum in the first quarter with operating earnings that jumped 14 percent to $742 million in the quarter. That included $42 million in costs tied to UnitedHealth's acquisition of the pharmacy benefits manager Catamaran Corp., a deal valued at more than $12 billion that the insurer announced last month.

Health insurance is UnitedHealth's largest business, but the company has been spreading its focus by expanding its Optum segment, which also offers data technology services and runs clinics and doctor's offices.

That's good for the parent company because the Optum business generally offers better profitability than the health insurance side, BMO Capital Markets analyst Jennifer Lynch said.

Overall, UnitedHealth earnings climbed about 29 percent to $1.41 billion, or $1.46 per share in the quarter that ended March 31. That's up from $1.1 billion, or $1.10 per share, in last year's quarter.

Revenue jumped 13 percent to nearly $35.76 billion.

Analysts expected, on average, earnings of $1.33 per share on $34.73 billion in revenue, according to Zacks Investment Research.

Shares of UnitedHealth Group Inc., a component of the Dow Jones industrial average, climbed 3 percent, or $3.69, to $121.01 in pre-market trading. The stock gained 34 percent last year, and the price has more than doubled since the end of 2012, hitting and resetting several all-time high marks along the way.

UnitedHealth is the first insurer to report earnings every quarter, and many analysts and investors see it as a bellwether for other insurers.

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