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Medicare Advantage has been lucrative for UnitedHealth and other insurers in recent years.
Courtesy of UnitedHealthcare
UnitedHealth Group
posted better-than-expected earnings and raised its outlook for the rest of the year.
The stock rose 3.2% in premarket trading Friday.
The healthcare provider’s earnings per share came in at $6.14 for the second quarter, ahead of analyst estimates for $5.99. Revenue increased 16% from a year earlier to $92.9 billion.
UnitedHealth Group
spooked the market last month with talk of high utilization and costs in the Medicare Advantage business.
Those comments, from
UnitedHealth
’s
(ticker: UNH) CFO in mid-June, sparked a selloff in managed care names. “There are some indications that it looks a little bit like a pent-up demand, or delayed demand being satisfied,” Chief Financial Officer John Rex said at the time.
The message was that spending would be high in the Medicare Advantage business, a privately managed version of Medicare that’s become popular with seniors, and extremely lucrative for insurers, in recent years. Companies like UnitedHealth have rushed into the Medicare Advantage business, competing for the large payments the government offers to insure Americans over the age of 65.
Higher spending on Medicare Advantage care in the quarter would mean that earnings would be weaker in the company’s Medicare Advantage business, and UnitedHealth Group shares fell 6.4% on the comments on June 14. Other managed care companies with significant Medicare Advantage businesses fell,…
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