(Reuters) -UnitedHealth Group Inc raised its full-year adjusted profit forecast on Thursday as falling COVID-19 infections helped the largest U.S. health insurer post lower quarterly medical costs than expected.
Its shares rose 6% as the company put to rest concerns of an impact from the fast-spreading Delta variant of COVID-19 with profit that exceeded market expectations for the third quarter.
A surge in infections in July and August had increased hospital costs, but infections have declined since then. The sector has also benefited from a decision by some hospitals to delay non-urgent procedures during the Delta surge.
UnitedHealth reported a medical loss ratio – the percentage of premiums paid for medical services – of 83.0% for the three months ended Sept. 30. Analysts had expected 83.5%, according to Refinitiv data.
The insurer raised its 2021 adjusted earnings per share outlook to between $18.65 and $18.90, from $18.30 to $18.80 earlier, and maintained its forecast of $1.80 per share in potential net unfavorable impacts from COVID-19.
Its quarterly results also benefited from higher sales in its Optum business, which has reported revenue growth for at least the last four consecutive quarters.
Revenue from the Optum unit, which manages drug benefits and offers healthcare data analytics services, rose 13.9% to $39.8 billion.
UnitedHealth’s core business that sells health insurance plans reported an 11% rise in sales to $55.9 billion, driven by higher enrollment across health plans including its Medicare Advantage plans for older Americans and the disabled.
The company earned $4.52 per share on an adjusted basis, beating market estimates of $4.41.
(Reporting by Manojna Maddipatla in Bengaluru; Editing by Sriraj Kalluvila and Aditya Soni)