By Tamara Mathias
(Reuters) - UnitedHealth Group Inc added more members to its health insurance plans in the third quarter, helping the industry bellwether beat profit estimates and raise its earnings forecast for the full year.
Kicking off the earnings season for the sector, the United States' largest health insurer said on Tuesday it now expects adjusted profit to approach $12.80 per share in 2018, compared with prior expectations of between $12.50 and $12.75.
While other health players including CVS Health, Aetna Inc and Cigna Corp are embarking on major merger deals, UnitedHealth has doubled down on a strategy of reining in costs and expanding its medical services group.
The company's insurance business added 2.8 million more members year-over-year in the third quarter and raked in revenue of $45.94 billion, 12.8 percent higher than last year.
UnitedHealth said the revenue growth was due to both a rise in number of members and higher membership growth in more expensive insurance plans that cover serious medical conditions.
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Analysts have said the health insurer is also benefiting from a drive to redirect patients who sign up for health plans to cheaper, more accessible locations. The company has also bought primary and urgent care businesses and pharmacies to service them and improve its own margins.
Sales from the company's other major business, Optum, through which it acts as an industry middle-man in pharmacy benefits management, grew nearly 11 percent to $25.39 billion, helped by acquisitions of specialty pharmacy operators Genoa Healthcare and Avella.
The company's medical care ratio, or the percentage of incoming premiums that it paid out for medical services, improved to 81 percent in the quarter, compared with 81.4 percent last year.
The company holds a conference call at 8.45 a.m. ET.
"We would expect the stock to be up as long as management endorses a favorable outlook for next year," Evercore ISI analyst Michael Newshel said in a note.
Net earnings attributable to shareholders rose 28 percent to $3.19 billion, or $3.24 per share, in the quarter ended Sept. 30.
Excluding items, the company earned $3.41 per share.
Total revenue rose 12.4 percent to $56.56 billion.
Analysts on average had expected earnings of $3.29 per share on revenue of $56.34 billion, according to I/B/E/S data from Refinitiv.
Shares of the Hopkins, Minnesota-based company rose 3.4 percent to $269.10 in light trading before the opening bell on Tuesday.
(Reporting by Tamara Mathias in Bengaluru; Editing by Maju Samuel)