UnitedHealth Group Inc.'s third-quarter earnings jumped 23 percent, thanks in part to Medicare and Medicaid business growth that helped the nation's largest health insurer beat analyst expectations.
The Minnetonka, Minn., company also raised its 2012 earnings forecast. It now expects earnings of $5.20 to $5.25 per share, up from a previous forecast for $4.90 to $5 per share. Analysts had expected $5.13 per share, according to FactSet.
UnitedHealth said Tuesday that it earned $1.56 billion, or $1.50 per share, in the three months that ended Sept. 30. That compares with $1.27 billion, or $1.17 per share, in last year's third quarter. Analysts had forecast earnings of $1.34 per share, and UnitedHealth said earlier this month its net income would be at least $1.45 per share.
Revenue rose 8 percent to $27.3 billion. That fell short of average analyst expectations of $27.58 billion.
The insurer said revenue from its Medicare and retirement business grew 13 percent to $10 billion compared to last year, as Medicare Advantage enrollment climbed 18 percent to 2.6 million people.
UnitedHealth is the largest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people.
Revenue from its community and state business, which includes Medicaid coverage for the poor and disabled, climbed 12 percent to $420 million.
The insurer's medical costs, its largest operating expense, climbed 6 percent to $19.47 billion in the quarter.
Health insurance is UnitedHealth's biggest business, but its Optum businesses also provide services such as health-management and wellness programs, technology outsourcing and pharmacy benefits. The company has touted that segment as an important source of future growth.
Optum's total revenue came in at $7.2 billion, which is flat compared with last year's quarter. But its operating earnings climbed 28 percent to $408 million.
UnitedHealth is the first major insurer to report earnings every quarter, and many see it as a sector bellwether.
Aetna Inc., the third largest insurer, reports results on Oct. 25, followed by Cigna Corp. on Nov. 1 and Humana Inc. on Nov. 5. The second-largest insurer, WellPoint Inc., will wrap up reporting for the five biggest managed-care companies when it releases results Nov. 7.