UnitedHealth profits grow with retreat from Obamacare

UnitedHealth Group reported strong profits and boosted its earnings forecast Tuesday helped by its controversial pullout from the Obamacare health insurance program.

Shares of the largest US health insurer and health benefits manager led the Dow Jones Industrial Average higher, jumping nearly 6 percent on its third quarter earnings and a strong outlook 2017.

UnitedHealth scored gains across the business, with increases in both employer-based health programs and those run through the US government Medicaid and Medicare programs.

Revenues also rose in its Optum health services business, which employs data analytics to serve employers, governments and other parties.

"Our growth indicators are positive as we conclude 2016, and we expect to be well positioned in 2017 to better serve consumers and deliver more value to the health system overall," said chief executive Stephen Hemsley.

Net profit was up 23.2 percent to $2.0 billion compared with the year-ago level. Revenues rose 11.6 percent to $46.3 billion.

UnitedHealth made waves in April, when it announced it would drop out of most the state exchanges for individual insurance policies created under the Affordable Care Act, President Barack Obama's signature healthcare reforms, because the policies were unprofitable.

At the time, executives from the insurer said it could lose up to $650 million in the exchanges. Some health care policy experts at the time said UnitedHealth's pullback reflected failures in how it structured its program rather than in Obamacare as a whole.

But a note Tuesday from Cantor Fitzgerald said the strong third-quarter results showed the advantage to its "early determination to quit exchanges," adding that the company "also appears to be gaining share in the commercial and Medicare markets."

"With UNH largely exiting the exchanges in 2017, we think the company has now put its harrowing experience in the exchange market largely behind it," said Credit Suisse. "The stock can now focus more exclusively on the sustainable businesses that generate positive returns."

Shares were up 7.0 percent to $143.51 in midday trade, by far the biggest gainer in the Dow blue-chip index.