UnitedHealth Group (NYSE: UNH) reported third quarter results, with continued strong, well-diversified performance across the enterprise.
“These results reflect our businesses delivering increased value at an accelerating pace to society and the millions of people we serve – one person at a time,” said David S. Wichmann, chief executive officer of UnitedHealth Group.
The Company raised its outlook for 2018 net earnings per share to now approach $12.10, from the prior range of $11.80 to $12.05, and adjusted net earnings per share to now approach $12.80, from the prior range of $12.50 to $12.75.
- UnitedHealth Group’s third quarter 2018 revenues grew $6.2 billion or 12.4 percent year-over-year to $56.6 billion, with strong revenue growth rates across both UnitedHealthcare and Optum.
- Third quarter earnings from operations grew $502 million or 12.3 percent year-over-year to $4.6 billion. Adjusted net earnings of $3.41 per share grew 28.2 percent, with an improved net margin of 5.6 percent.
- Adjusted cash flows from operations of $6.1 billion were 1.9x net income in third quarter 2018.
- The consolidated medical care ratio of 81.0 percent in the third quarter of 2018 decreased 40 basis points year-over-year, with the return of the health insurance tax more than offsetting business mix changes and more moderate reserve development. Favorable medical reserve development of $50 million in the quarter was driven by $120 million in favorable development related to 2018, partially offset by $70 million in unfavorable development from 2017.
- The operating cost ratio of 15.0 percent in the third quarter of 2018 increased 30 basis points year-over-year, as business mix changes and operating efficiencies were more than offset by the return of the health insurance tax.
- The third quarter 2018 income tax rate of 22.5 percent decreased 10 percentage points year-over-year, reflecting the reduced federal statutory rate and results of tax planning and management, partially offset by the return of the nondeductible health insurance tax for 2018.
- Third quarter 2018 days claims payable increased three days sequentially and remained unchanged year-over-year at 51 days. Days sales outstanding of 18 days was flat sequentially while increasing two days year-over-year.
- Annualized return on shareholders’ equity increased 340 basis points year-over-year to 25.9 percent, and the debt to total capital ratio decreased sequentially by approximately two percentage points to 38.9 percent at September 30, 2018.
- UnitedHealth Group repurchased 1.9 million shares in the third quarter, bringing year-to-date purchases to 15.7 million shares for $3.65 billion. Dividends paid to shareholders were $866 million in the third quarter, reflecting the 20 percent increase in the Company’s dividend rate in June 2018.