UnitedHealth adds 1 million more insurance customers
UnitedHealth Group’s third-quarter earnings soared 26 percent to beat Wall Street expectations as the nation’s largest health insurer sold more coverage to retirees and continued to grow its business outside insurance.
The company also raised its forecast for 2017 again and signaled that it expects more growth next year. Its shares then shot up past $200 to reach another all-time high after markets opened.
UnitedHealth said Tuesday that it gained nearly 1 million more customers compared to last year’s quarter, largely due to growth in its Medicare and retirement business. UnitedHealth is the nation’s largest provider of Medicare Advantage plans, which are privately run versions of the government’s Medicare program for the elderly and disabled people.
That gain more than countered a revenue hit the insurer took from the deferral of an insurance tax and the company’s decision to scale back its presence on the Affordable Care Act’s insurance marketplaces to only a few states after booking big losses.
Operating earnings grew 14 percent to $2.4 billion for the company’s main business, health insurance, as total enrollment topped 49 million people. But its Optum segment also saw earnings increase to $1.7 billion. Optum provides pharmacy benefits management and technology services and also operates clinics and doctor’s offices.
Overall, the Minnetonka, Minnesota, company earned nearly $2.49 billion as revenue grew 9 percent to $50.32 billion. Adjusted earnings totaled $2.66 per share.
Analysts expected earnings of $2.56 per share on $50.35 billion in revenue, according to FactSet.
UnitedHealth Group Inc. also said Tuesday that it expects 2017 earnings to approach $10 per share. That’s up from a forecast it increased in July to between $9.75 and $9.90 per share.
Johnson & Johnson’s quarterly forecast
Higher spending across the board drove Johnson & Johnson’s third-quarter profit down 12 percent, despite a big sales jump fueled by recent acquisitions, hot new cancer drugs and strong sales of other key medicines.
However, the health care giant easily topped Wall Street expectations. With momentum in product sales across all three business segments, the Band-Aid maker boosted its financial forecast for the third time this year.
“This was a strong quarter for Johnson & Johnson,” Edward Jones analyst Ashtyn Evans wrote Tuesday to investors, adding that its strong balance sheet should enable more product acquisitions.
J&J’s biggest ever, $30 billion to buy Swiss biopharmaceutical company Actelion in June, added $670 million to the quarter’s sales of Actelion’s drugs for dangerously high blood pressure in the lungs. That also gave J&J a sixth disease focus area, along with drugs for cancer, infectious diseases and immune, neurological and cardiovascular disorders.
Sales of prescription medicines soared 15.4 percent to $9.7 billion, boosted by blood cancer drug Imbruvica, Darzalex for multiple myeloma, blood thinner Xarelto and immune disorder drug Stelara. Revenue from some older drugs declined amid pressure for lower prices and increased competition.
But J&J said it’s scrapped two experimental drugs it recently touted as future blockbusters. As expected, J&J threw in the towel on rheumatoid arthritis drug sirukumab due to disappointing testing results, including nearly three dozen patient deaths, and dim prospects versus already-approved rivals. J&J also stopped its late-stage patient study of talacotuzumab in leukemia, due to a poor risk-benefit balance.
CSX profits rise but revenues short of forecast
JACKSONVILLE, Fla. – CSX Corp. reported third-quarter earnings that met expectations, but its revenue took a hit as the company suffered service delays while overhauling its operations.
The freight railroad company acknowledged that it struggled to execute its new operating plan. Those problems were further aggravated by two major derailments and the impact of Hurricane Irma, which hit Florida in September, disrupting the operations of the Jacksonville-based company.
CSX reported net income of $459 million, or 51 cents a share, matching the average per-share estimate of 11 analysts surveyed by Zacks Investment Research. That was up from $455 million, or 48 cents a share, a year ago.
It posted revenue of $2.74 billion in the period that ended Sept. 30, falling short of the $2.77 billion expected by seven analysts surveyed by Zacks. It posted revenue of $2.71 billion in the same quarter last year.
The company announced in early September that its service had improved, but that it was trimming its profit outlook for the year.
CSX’s moves are all part of the operating plan new CEO Hunter Harrison brought with him when he was hired in March. The 72-year-old previously used tighter train schedules and lean expenses to generate significant profits at Canadian Pacific and Canadian National railroads.
As part of the changes, CSX has eliminated 3,700 jobs this year.
CSX is also changing the way trains are assembled at some railyards, reducing its number of internal divisions and consolidating all nine of its dispatching offices into one.
The railroad operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces.
Morgan Stanley boosts profit by 12 percent
Investment bank Morgan Stanley said Tuesday that its third-quarter profits rose 12 percent, as the firm’s wealth management arm was able to earn more money despite a slow summer in the markets.
The Wall Street bank said it earned $1.78 billion, or 93 cents a share, compared with $1.6 billion, or 81 cents per share, in the same period a year earlier. The results beat analysts’ expectations of 81 cents per share, according to FactSet.
Since the financial crisis nearly a decade ago, Morgan Stanley’s management has been pushing the firm away from trading, which can ebb and flow with how the market is acting quarter to quarter, and into more steady forms of business, most notably wealth management, since Morgan Stanley doesn’t have a large consumer banking business. That bet paid off this quarter.
Morgan Stanley’s wealth management arm drove most of the profit gain in the quarter, reporting a 9 percent rise in revenue. The firm’s assets under management grew as well as fee income from advising individual investors.
Like its competitors, Morgan’s trading desks were hampered by a slow summer as quiet markets kept investors from trading actively on their positions. The firm’s stock trading revenue was relatively flat, but the firm’s bond trading revenue fell 20 percent from a year earlier to $1.2 billion from $1.5 billion. Unlike its competitors, Morgan Stanley’s trading operations are weighted more toward stock trading.
Investment banking revenue also increased to $1.3 billion from $1.1 billion.
Overall revenue rose 3 percent to $9.2 billion versus $8.91 billion a year earlier, also beating expectations.