UnitedHealth Group saw its profit jump to $5.26 billion during the third quarter, beating analyst estimates and prompting the company to once again raise financial guidance for the year.
The Minnetonka-based health care giant has now hit the $5 billion mark in earnings during each of the first three quarters in 2022.
During the July-to-September period, the company said operating profit grew by more than one-third at its UnitedHealthcare business, which is the nation's largest health insurer. Executives attributed this to increased membership and better management of medical and operating costs.
The Star Tribune reported in September how UnitedHealthcare hoped next year to begin selling coverage to individuals in four new states under the federal Affordable Care Act.
On Friday, executives said those four expansions had been approved by regulators and will augment the insurer's push to significantly expand the number of counties across 18 other states where it currently sells the coverage.
The moves are part of a broader return to the insurance market where subsidized policies are sold through government-run health exchanges — a market UnitedHealthcare largely abandoned five years ago.
Earlier this month, UnitedHealth Group completed its acquisition of Tennessee-based Change Healthcare, a $13 billion deal the Justice Department unsuccessfully tried to block on competitive grounds.
Andrew Witty, the UnitedHealth Group chief executive, told investors Friday the company's mergers and acquisition activity has been up significantly this year and suggested the trend might continue.
"The marketplace is getting interesting around that space," Witty said. "And we've talked several times to you in the past about the diverse pipeline of opportunities that we see, probably as diverse as we've seen. ... So, we'll see how that plays out for us, but I think you have to expect that to be a tailwind for us as well going into next year."
Overall in the third quarter, UnitedHealth Group saw earnings of $5.26 billion, an increase of 29% compared with the same period last year, on revenue of $80.89 billion. Excluding one-time items, adjusted earnings of $5.79 per share beat analyst estimates by 35 cents.
The company increased its full-year 2022 outlook for adjusted net earnings to a range of $21.85 to $22.05 per share, up from the $21.40 to $21.90 range announced in July.
At the end of the third quarter, about 26.6 million people in the U.S. had coverage through UnitedHealthcare's commercial health plans, which primarily are sponsored by employers.
Despite worries over economic stress for these employers amid growing talk of a broader recession, UnitedHealthcare hasn't yet seen evidence of a recessionary impact, said Daniel Kueter, the chief executive of the company's commercial business.
"We have seen net hiring among our customers," Kueter said. "Looking forward to 2023, we will assess the continued evolving economic situation and provide additional guidance as that becomes more clear."
UnitedHealthcare sees growth potential in the individual health insurance market partly because it expects state Medicaid programs will begin redetermining next year whether current enrollees can keep their benefits.
Redeterminations in Medicaid, the state-federal coverage program for lower-income people, have been suspended throughout the national public health emergency with COVID-19. Once they resume, many beneficiaries are expected to lose coverage, with a significant number likely turning to subsidized health plans sold on government-run health exchanges.
"We see the exchanges as really emerging as a meaningful place ... and it's certainly important to us to be more relevant each and every year," said Brian Thompson, the UnitedHealthcare CEO.
"While we're expanding into four new states in 2023, our footprint is expanding meaningfully," Thompson added.
Optum, the company's division for a variety of health care services, saw earnings from operations grow 19%. It was led by Optum Health, a unit that operates outpatient medical facilities.
With clinics, urgent cares and surgery centers, the division's care delivery platform includes about 20 million or so patients, Witty said.
The Star Tribune reported in September that MedExpress, Optum Health's business running urgent care centers, shrank from around 260 clinics in 2019 down to more than 150 as of late summer. Even so, earnings from operations keeps growing at Optum Health, up 38% year-over-year during the third quarter alone.
UnitedHealth Group, which employs about 18,000 people in Minnesota, is the state's largest company by revenue. Its shares were trading up about 1% Friday afternoon.