UnitedHealth Group Inc.'s (UNH) third-quarter earnings inched up 1 percent in a rare performance that failed to trump Wall Street expectations, and the nation's largest health insurer gave a less-than-reassuring vibe to investors by narrowing its 2013 forecast instead of raising it.
The Minnetonka, Minn.,-based company said Thursday that it raised the bottom end of its previous forecast for 2013 earnings by a nickel to $5.40 to $5.50 per share. UnitedHealth hasn't changed the top end of that forecast since it made its first prediction for the year last November. Analysts polled by FactSet expect $5.52 per share for 2013.
Shares of UnitedHealth, which investors sent to a record high last month, fell $1.19, or 1.6 percent, to $74 in premarket trading about 2 1/2 hours before the market opening.
UnitedHealth earned $1.57 billion, or $1.53 per share, in the quarter that ended Sept. 30. That's up from $1.56 billion, or $1.50 per share, a year ago. Revenue jumped 12 percent to $30.62 billion.
Analysts expected earnings of $1.53 per share on $30.86 billion in revenue.
UnitedHealth is the largest health insurer based on revenue and enrollment. It is the first health insurer to report earnings every quarter. Many see it as a bellwether for other insurers.
The insurer's largest expense, medical costs, rose 13 percent to $22 billion in the quarter, due in part to cuts in Medicare Advantage funding.
UnitedHealth is the nation's largest provider of Medicare Advantage plans, which offer government-subsidized coverage for elderly and disabled people. The insurer has nearly 2.9 million people enrolled in the plans, and they brought in about 20 percent of its revenue last year.
UnitedHealth executives have warned that funding cuts to this program will pressure their business. Medicare Advantage plans took a hit earlier this year from federal budget cuts, and they also face more cuts due to the federal health care overhaul, which aims to provide coverage for millions of uninsured people.