UnitedHealth Group raised its 2019 forecast and detailed another better-than-expected quarter Tuesday, but shares soared after company leaders mentioned next year's growth prospects.
CEO David Wichmann told analysts it would be "reasonable and prudent" for them to set initial expectations for core operating performance at the lower end of UnitedHealth's long-term goal of 13% to 16% growth annually.
That's slightly higher than average expectations on Wall Street, according to FactSet.
Company shares rose more than 7% in midday trading, erasing most of the 11% price drop they had seen so far in 2019.
The nation's largest health insurance provider typically starts its annual forecasts conservatively and won't discuss expectations again until its annual investor conference in December. Even so, Wichmann's comments helped juice a sector of stocks that has lagged this year while broader indexes like the Dow Jones Industrial Average have climbed around 15%.
Shares of other health insurers and pharmacy benefit managers like Anthem Inc. and Cigna Corp. also jumped in Tuesday trading.
Those stocks have bounced around this year, as some Democratic presidential candidates have renewed a push for a "Medicare for All " plan that could replace private coverage and as Congressional committees investigated soaring drug costs .
UnitedHealth Group Inc. provides health insurance for more than 49 million people and also runs one of the nation's biggest pharmacy benefit management businesses through its Optum segment.
Operating earnings from Optum jumped 20% in the company's third quarter to $2.4 billion, while the company's bigger health insurance side saw 4% growth to $2.7 billion.
Optum also runs clinics and surgery centers as part of the company's push to get more involved in care. In June, UnitedHealth completed a $5 billion deal to buy hundreds of DaVita Medical Group clinics, and that helped revenue grow in the third quarter.
Overall the insurer's earnings jumped 11% in the quarter to $3.54 billion. Earnings, adjusted for one-time gains and costs, were $3.88 per share, which is 8 cents better than Wall Street was expecting, according to Zacks Investment Research.
Total revenue grew about 7% to $60.35 billion, also topping projections.
Medical costs, by far the company's largest expense, grew 8% compared to last year's quarter and topped $39 billion, but UnitedHealth said that trend remained within expectations.
Minnetonka, Minnesota-based UnitedHealth Group Inc. said Tuesday that it now expects full-year earnings of between $14.90 and $15 per share after previously raising its forecast in July.
Analysts expect earnings of $14.83 per share, according to FactSet.
Follow Tom Murphy on Twitter: @thpmurphy
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNH at https://www.zacks.com/ap/UNH
Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.