UnitedHealth Group’s second-quarter profit jumped to $6.6 billion — double the earnings from the same period last year — as the nation’s largest health insurer paid out far fewer claims with the temporary shutdown of elective procedures due to COVID-19.
The Minnetonka-based health care company said in an earnings release Wednesday that profits were “substantially higher than anticipated due primarily to the unprecedented, temporary deferral of care.”
Hospitals and clinics across the country delayed elective and nonemergency procedures stating in late March and through April to conserve supplies and prepare facilities to treat patients sickened with COVID-19.
“The company expects these results will be offset in the quarters ahead by the assistance measures already taken, the resumption of deferred care and future COVID-19 cost and economic impacts,” UnitedHealth Group said in the release. “As the pandemic advanced, access to and demand for care was most constrained from mid-March through April, began to recover in May and approached more typical levels by the end of the second quarter.”
The company’s UnitedHealthcare health insurance business paid out about 70 cents for every dollar of premium revenue in the second quarter, compared with last year’s claims expense of about 83 cents for every dollar of premium revenue. COVID-19 caused unexpected medical costs during the quarter from patients sickened in the pandemic, but the expenses were more than offset by the elective surgery reductions.
Earnings from operations at UnitedHealthcare jumped from $2.6 billion in the year-ago quarter to $7 billion during the three month period ending June 30. The profit margin at the health insurance business was about 14%, compared with about 5% in the year-ago quarter.
UnitedHealth Group is Minnesota’s largest company by revenue, with more than 320,000 employees worldwide. UnitedHealthcare provided health insurance coverage at the end of June to about 43 million people in the U.S.
During the second quarter, enrollment in the company’s fully insured health plans declined by about 150,000 people, to just over 8 million. Those include health plans where employers pay UnitedHealthcare to assume risk for the cost of medical claims — the insurance products where the company saw unusually high profits in the second quarter.
The company on Wednesday reiterated its pledge to address any financial “imbalances” in the fully insured business. In the earnings release, UnitedHealth Group said it had extended grace periods for employers and individuals to pay premiums during the second quarter.
Overall, the company says it has provided $1.5 billion in direct customer and consumer support via premium credits, cost-sharing waivers and other measures. “Expect another $1 billion in rebates to be paid in future periods,” the company said in the release.
UnitedHealth Group earned $6.64 billion during the three month period, double the company’s $3.29 billion profit during last year’s second quarter.
Adjusted earnings of $7.12 per share far surpassed the $5.18 per share expected among analysts surveyed by Refinitiv. Quarterly revenue of $62.14 billion fell short of expectations.
The company maintained its earnings outlook of adjusted net earnings of $16.25 to $16.55 per share. Adjusted earnings exclude factors the company believes don’t relate to the underlying business, such as amortization of acquisition-related intangible assets.
Twitter: @chrissnowbeck