UnitedHealth Group’s second-quarter earnings slipped 2 percent on a rise in taxes and other expenses, but the nation’s largest health insurer still trumped analysts’ expectations.
The Minnetonka, Minnesota, company also raised the low end of the earnings range it forecasts for this year. Its shares rose about 1 percent in premarket trading Thursday.
UnitedHealth said it earned $1.41 billion, or $1.42 per share, in the three months that ended June 30. That’s down from $1.44 billion, or $1.40 per share, in the 2013 quarter, when it had more shares outstanding.
Revenue rose 7 percent to $32.57 billion.
Analysts expected, on average, earnings of $1.26 per share on $31.9 billion in revenue, according to FactSet.
UnitedHealth said its income tax rate for the second quarter climbed from around 35 percent to more than 41 percent this year due to provisions from the health care overhaul, the federal law that aims to provide insurance coverage to millions of people. Health insurers started paying an industry-wide tax that is non-deductible this year.
UnitedHealth said its provision for income taxes in the second quarter jumped 25 percent to $989 million. The insurer’s largest operating expense, medical costs, also climbed 6 percent to $23.52 billion.
UnitedHealth also cited the health care law as a chief reason its first-quarter profit slid 8 percent. The overhaul-related hits shouldn’t surprise investors. The insurer said back in December that it expected the federal law to reduce its after-tax operating earnings by $1.1 billion in 2014.
UnitedHealth now expects 2014 earnings to range between $5.50 and $5.60 per share, compared to its previous forecast for $5.40 to $5.60 per share.
Analysts predict, on average, earnings of $5.52 per share.
UnitedHealth Group Inc. is the first insurer to report earnings every quarter. Many see it as a bellwether for other insurers.
Company shares climbed 84 cents to $84.60 in premarket trading Thursday. Its shares are up more than 11 percent for 2014 through Wednesday’s close.