UnitedHealth, the largest U.S. health services company by revenue, wants to keep its crown.
The company’s third-quarter 2023 earnings results, announced on Friday (Oct. 13), showed strong growth through the first nine months of the fiscal year, raking in $16.9 billion in profit, compared to $15.4 billion over the same period last year, and adding 1.1 million members.
UnitedHealth’s results surpassed Wall Street’s expectations on both profit and revenue, lifted by lower-than-expected medical costs at its health insurance unit.
“As a result of our colleagues’ steadfast focus on helping people access and receive the care they need, we are well-positioned to help even more people and continue to generate strong, diversified growth in the coming years,” said UnitedHealth Group CEO Andrew Witty.
The company’s Optum subsidiary, which includes the OptumRx, Optum Health and Optum Insight business lines, is having “a really strong growth year,” Witty added.
In total, third-quarter revenues for the Optum lines of business grew by 22% year over year to $56.7 billion, with operating earnings jumping $200 million from $3.7 billion last year to $3.9 billion in 2023. The subsidiary’s operating margin declined by a percentage point year over year from 7.9% to 6.9% as a result of internal investments.
See also: UnitedHealth Sees Data-Wrapped Decisioning Drive Growth
The company’s Optum Health unit, which includes physician groups and other care delivery channels, saw operating income decline for the first since 2014 — a drop of 0.4% — while at the same time, revenue increased 29% over last year, and revenue per consumer served increased 27%, driven by growth in patients served under value-based care arrangements and continued expansion of the types and levels of care provided.
Optum Insight revenue increased by 35% compared to the year prior due to growth across the vertical’s technology-enabled offerings. The revenue backlog for Optum Insight increased by over $7 billion to more than $31 billion compared to 2022.
Optum’s three businesses focus on five core capabilities: data and analytics; pharmacy care services; population health; healthcare delivery; and healthcare operation.
PYMNTS Intelligence found that the healthcare sector is joining a long list of industries in which the economy’s digital shift has taken hold.
Company executives told investors during Friday’s earnings call that UnitedHealth remains committed to “doubling down on our commitment to value-based care and digital-first health support… We will continue to innovate and provide comprehensive innovative and transparent services to consumers.”
“We have an incredible portfolio … growth engines plus innovations plus margin profile,” Witty said.
UnitedHealth is largely seen as a bellwether for the sector and was the first and largest health insurance company to report financial results this quarter. The company’s focus on digital-first solutions is in line with consumer sentiment, as consumers increasingly gravitate toward products and services that are convenient and help them access services and treatment.
According to “Healthcare in the Digital Age: Consumers See Unified Platforms as Key to Better Health,” a PYMNTS Intelligence and Lynx collaboration, 91% of consumers are at least somewhat interested in a unified digital platform for managing their healthcare needs and report having encountered problems using their healthcare services or insurance benefits in the past.
Navigating a friction-filled healthcare system, not to mention the complexities of insurance coverage, can often be overwhelming. Consumers are used to streamlined digital conveniences in their regular day-to-day lives and are beginning to expect them in areas like healthcare.
Read also: 79% of Consumers Want to Pay All Medical Bills From Single Digital Platform
GLP-1 weight loss and diabetes drugs were repeatedly returned to during the company’s Q&A section of the earnings call Friday, with United executives emphasizing that affordability is crucial.
“OptumRx will continue to negotiate lower prices over time, so the right people get the right care,” OptumRx CEO Dr. Patrick Conway said. “… [W]e are developing comprehensive solutions of which medicine is only a part of to deliver better health outcomes.”
Executives reaffirmed that the go-forward message for the business is to “refocus our benefits strategy around what matters most to patients,” which are care services that are affordable and accessible.
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