UnitedHealth beats expectations all around, stock still lags

UnitedHealth Group beat first-quarter expectations and hiked its 2019 forecast, but shares of the nation's largest health insurer continued their slump as investors worry about growing Congressional scrutiny of how the company and its competitors do business.

Shares of health insurers and pharmacy benefit managers, or PBMs, have bounced up and down this year, as Democratic presidential candidate Bernie Sanders launched a renewed push for a "Medicare for All" plan that could replace private coverage and as Congressional committees grilled PBM executives over their role in soaring drug costs.

Policy concerns like these are "top of mind" for investors ahead of the 2020 presidential election, SVB Leerink analyst Ana Gupte said in a Tuesday morning research note.

While Medicare for All has little chance of getting through a politically divided Congress, other Democrats support the idea, and the uncertainty produced by such a big potential change can make investors nervous. Health insurance stocks also went through some volatility several years ago as the Affordable Care Act became law.

UnitedHealth CEO David Wichmann told analysts Tuesday that some of the proposals being discussed now could hurt doctor-patient relationships, destabilize the health care system and produce costs big enough to hurt the economy, all without improving care access.

"The path forward is to achieve universal coverage and it can be substantially reached through existing public and private platforms," Wichmann said, referring to the system's current mix of commercial coverage and government funded programs like Medicare and Medicaid.

UnitedHealth's insurance business covers 50 million people internationally, and the company also has been stoking growth in its Optum segment for several years now. That business runs one of the nation's largest...