Zachary Tracer and Marthe Fourcade
UnitedHealth Group Inc., the largest U.S. health insurer, said it may pull out of the Obamacare insurance exchange market and cut its earnings estimate for the year. The stock slumped in early trading.
“The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017,” UnitedHealth said in a statement. The shares fell 6.6 percent to $109.5 in trading before U.S. exchanges opened.
Insurers have struggled to profit from the government-run marketplace created by Obamacare. Anthem Inc. last month said some rivals were offering premiums too low to provide the coverage patients require and book a profit.
“We can expect other participants to guide to the same experience,” Sheryl Skolnick, an analyst at Mizuho Securities, said in a note. The Minnetonka, Minnesota-based company “is insulated in part from the exchange issue because it entered late and in a more limited way than peers, and because it has a more diversified business model. We expect the group to get hit harder.”
Earnings per share will probably be $6 this year, down from a range of $6.25 to $6.35, reflecting a “continuing deterioration in individual exchange-compliant product performance,” UnitedHealth said. Next year, earnings per share will be between $7.10 and $7.30, it said, giving 2016 guidance for the first time. The company plans to hold a conference call at 9 a.m. Eastern time.
