UnitedHealth Group was already expecting to see a decline in commercial membership in the first quarter with those numbers improving by the end of the year, executives said Wednesday,
Now, however, with the COVID-19 pandemic leading to millions of people losing their employment nationwide, the insurance giant says it's unlikely to make up that lost ground in 2020.
"With the current COVID crisis, we expect to be down for the year," said Dirk McMahon, CEO of UnitedHealthcare, on the company's earnings call.
UnitedHealthcare saw commercial plan membership decline by 475,000 compared to the first quarter of 2019, though it also reported a 410,000 increase in Medicare Advantage membership year over year, according to its earnings report.
McMahon did say that the insurer does expect to see some of the membership losses in the group coverage business line offset by growth in Medicaid and the individual market.
McMahon also added that UnitedHealthcare is seeing an uptick in customers seeking premium relief as a result of the pandemic. Typically, these payment plans represent about 0.4% of premium revenue, while on March 1 that increased to 1%. For April 1, it was 3%.
"It's a little bit elevated but we're going to continue to work with our customers on payment plans," McMahon said.
UnitedHealth Group released its first-quarter earnings report Wednesday, with the insurance giant reporting $3.4 billion in profit.
Adjusted earnings per share were $3.72, beating Wall Street projections for the quarter.
UnitedHealth also reported (PDF) $64.4 billion in revenue for the first quarter, up from $60.3 billion in the first quarter of 2019. In the release, the company noted that its financial results were "balanced" despite needing to reorient its strategy to fight COVID-19.
"From the outset of the COVID-19 pandemic, our singular priority has remained clear: the health, safety and support of the people and communities we serve, including our dedicated team of 325,000 people and the heroic members of the health care workforce, and the reliability and sustainability of health care delivery systems,” said David Wichmann, CEO of UnitedHealth Group, in a statement.
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In the earnings release, UnitedHealth said President Andrew Witty, who is also CEO of the Optum subsidiary, will be taking a leave of absence from the company to work with the World Health Organization on COVID-19 vaccine development.
He will return to UnitedHealth in the future, the insurer said.
Revenues at Optum continue to grow by double digits, reaching $32.8 billion in the first quarter. That's an increase of 24.6% from the $26.4 billion reported in the first quarter of 2019.
Revenue at UnitedHealthcare held relatively steady year over year, with $51.1 billion reported compared to $48.9 billion in the first quarter of 2019.
Based on the results, UnitedHealth Group maintained its 2020 guidance of between $16.25 and $16.55 in adjusted earnings per share. The insurer said it would continue to evaluate the impacts of COVID-19 on its financial performance as the year rolls on.