Insurer UnitedHealth raises 2021 profit view after upbeat quarter

UnitedHealth Group Inc on Thursday raised its 2021 adjusted profit target, after strong growth in its Optum unit helped the largest US health insurer handily beat first-quarter profit estimates.

Shares of the company were up 1.7% in light premarket trading.

A sharp rebound in demand for elective medical procedures delayed at the height of the COVID-19 pandemic is expected to weigh on health insurers' profits in 2021 after they benefited last year from lower spending on non-COVID care.

Health insurers have also been pressured by a steady rise in costs related to testing, treatment and vaccination against the coronavirus as they shell out millions of dollars to help their customers get the services.

However, UnitedHealth's medical loss ratio - the percentage of premiums paid out for medical services - stood at 80.9% for the quarter ended March 31, compared with 81% a year earlier.

Revenue from the company's main growth driver, Optum unit, which manages drug benefits and offers healthcare data analytics services, rose 10% to $36.4 billion.

This was UnitedHealth's first quarterly earnings since new Chief Executive Officer Andrew Witty took the reins in February from David Wichmann, who retired after just over three years at the helm.

The company reported adjusted earnings of $5.31 per share, beating estimates of $4.38 per share, according to IBES data from Refinitiv.

It now sees 2021 adjusted earnings of $18.10 to $18.60 per share, up from its previous forecast of $17.75 to $18.25 per share.

The outlook includes about $1.80 per share hit due to treatment and testing costs related to COVID-19.