FILE - This Oct. 16, 2012, file photo, shows a portion of the UnitedHealth Group Inc.'s campus in Minnetonka, Minn. UnitedHealth Group reports financial results Wednesday, Jan. 15, 2020. (AP Photo/Jim Mone, File)

UnitedHealth won't seek federal aid because of outbreak

April 15, 2020 - 8:26 am

UnitedHealth Group is sticking to its 2020 profit outlook and says it won't seek federal assistance to make it through a coronavirus outbreak that has hobbled much of the economy.

The coronavirus developed too late in the United States to have much of an impact on UnitedHealth's first quarter. But it could hit the company from several angles.

UnitedHealth runs a health insurance business that covers nearly 49 million people, mostly in the United States.

Its Optum segment also runs one of the nation’s largest pharmacy benefit management operations as well as a growing number of clinics and urgent care and surgery centers.

Analysts expect those surgery centers to see a drop in business as patients cancel or postpone elective procedures. That could help the insurance operation, depending on how many of those claims are merely pushed back to the second half of the year.

But the insurance side also could take a hit depending on how many people lose their health coverage during the wave of layoffs that have swept across the country.

UnitedHealth's enrollment did slip more than 2% in the quarter, but company leaders had predicted that mostly due to a loss of some contracts.

Net income also fell about 2% to $3.38 billion, but adjusted earnings of $3.72 per share easily topped Wall Street expectations.

Total revenue climbed 7% to $64.42 billion, helped by a nearly 25% jump from the Optum segment.

UnitedHealth maintained a 2020 outlook for adjusted earnings of between $16.25 and $16.55 per share, the same forecast it laid out late last year.

Analysts expect, on average, earnings of $16.21 per share, according to FactSet.

Many companies have withdrawn financial forecasts for the year because the pandemic has made most of them worthless. UnitedHealth said Wednesday that it will continue to evaluate the impact of the global pandemic on all of its businesses throughout the year.

UnitedHealth also said Wednesday that it will temporarily lose one of its leaders. Optum Chief Executive Andrew Witty will take a leave of absence to help lead a World Health Organization push to accelerate the development of a COVID-19 vaccine.

Witty is the former CEO of British drugmaker GlaxoSmithKline. UnitedHealth expects him to return around the end of the year. UnitedHealth CEO David Wichmann will lead Optum in the meantime.

Shares of UnitedHealth Group Inc., a Dow Jones Industrial Average component, are up almost 2% to $275 before the opening bell Wednesday.

The Minnetonka, Minnesota, company's stock had climbed 18% in 2019, with the price reaching $300 for the first time in late December. It hit an all-time high price of $306.72 in February before shedding more than $100 in value over the next month as the broader market tanked.

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Follow Tom Murphy on Twitter: @thpmurphy

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A portion of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNH at https://www.zacks.com/ap/UNH

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