UnitedHealth beats Q1 projections, but Medicare-for-All talk starts stock sell-off

UnitedHealthcare
UnitedHealth Group held its first-quarter earnings call Tuesday morning. (jetcityimage/Getty)

Buoyed by significant growth in Medicare Advantage, UnitedHealth Group beat Wall Street expectations during the first quarter of 2019 with a 19% jump in its profits.

The company reported its earnings were $4.8 billion in the first quarter of 2019 ended March 31. That's up $779 million over the first quarter of 2018, according to the company's latest earnings data released Tuesday. The company also reported a bump in the revenue for the first quarter reaching $60.3 billion, up 9% from $55.2 billion in the first quarter of 2018.

One of the drivers of this trend was a significant bump in its MA business, which saw a $2.2 billion revenue growth the first part of the year, reaching $21.1 billion total. They increased by more than 400,000 additional members year over year.

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Steve Nelson, CEO of UnitedHealthcare, said on the company’s earnings call Tuesday morning that the “market is responding to UnitedHealthcare’s practical innovations, personalization and service performance on behalf of those we serve.” 

RELATED: Why UnitedHealthcare wants to expand diagnostic codes to the social determinants of health 

“Our data shows that seniors in our Medicare Advantage plans see on average about one-half the number of doctors as similar seniors using original Medicare,” Nelson said. “This means a simpler, less confusing experience and better outcomes for patients and better use of scarce health system resources overall.” 

Medicare-for-All discussion

During the call, UnitedHealth Group CEO David Wichmann also addressed swelling political interest in “Medicare for All” as a single-payer system that would eliminate private coverage. 

Wichmann drew a contrast between those policies and “the kind of real progress” UnitedHealth is achieving as a commercial payer. For example, Optum saw a 16% increase in medication adherence following its plan to use more point-of-sale drug discounts

“The wholesale disruption of American health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best,” he said. 

The cost burden of a fully public system, he said, would put a major drain on the economy and the job market and would do little to boost access. Instead, the focus should be on working together across the industry to improve the existing system. 

RELATED: UnitedHealthcare to expand bundled payments in its Medicare Advantage plans 

Just the mention of “disruption” sent frissons of alarm across the stock market, according to Seeking Alpha. Despite the positive financial results, which exceeded Wall Street’s expectations, UnitedHealth’s stock was down by about 6% as of 2 p.m. Tuesday, as were those for its competitors. 

Humana’s stock was down by about 8% at that time, Cigna’s was down 7% and Anthem’s by about 7.4%. 

That stock volatility eventually hit the hospital sector as well, according to Seeking Alpha. Tenet Healthcare stocks were down by nearly 10% at 2 p.m. Tuesday, as were shares of HCA Healthcare. Community Health Systems shares were also down by about 6% 

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