UnitedHealth shares rose 2.5 percent in premarket Tuesday after the health insurer said it more than doubled its net profit in the fourth quarter, driven by a one-time tax gain due to the new tax bill.
The tax benefit also helped the company raise its 2018 full-year adjusted earnings per share forecast to range between $12.30 and $12.60.
UnitedHealth, the largest U.S. health insurer, had forecasted in November that 2018 adjusted earnings per share would range between $10.55 and $10.85 on a revenue of $223 billion to $225 billion.
For the fourth quarter, UnitedHealth said Tuesday, it earned $2.59 per share, excluding items. Total revenue for the quarter rose 9.5 percent to $52.06 billion. Wall Street expected earnings of $2.51 per share on revenue of $51 billion, according to Thomson Reuters’ consensus estimates.
Revenue from the company’s Optum business, which manages drug benefits and offers health-care data analytics services, rose 10 percent to $24.39 billion.
“There’s a dot that needs to be connected between tax policy and health policy,” said Ana Gupte, a senior health-care services analyst at Leerink Partners. Gupte has an outperform rating on United stock with a price target of $260. In Tuesday’s premarket, it was trading above $2.34.
“Because if a portion of it falls to the bottom line and a portion of it goes to the American consumer, you have Medicare now potentially getting from a third of American seniors to about 50 percent of American seniors before the 2020 elections,” Gupte added in an interview on “Squawk Box.”
The company, which sells employer-based insurance as well as Medicare and Medicaid, said net earnings attributable to shareholders rose to $3.62 billion, or $3.65 per share, in the fourth quarter ended Dec. 31, from $1.68 billion, or $1.74 per share, a year earlier.
“We enter 2018 with both growth momentum and opportunity as a result of our focus on improving the experience of those we serve, combined with actions taken to deepen our capabilities and presence in strategic markets,” UnitedHealth CEO David Wichmann said in the earnings release.
The quarterly earnings included a one-time tax benefit of $1.21 per share, the company said.