UnitedHealth sees minimal impact from rebate system overhaul
By Tamara Mathias and Manojna Maddipatla (Reuters) - UnitedHealth Group Inc said on Tuesday it expects minimal impact to its margins if the rebate system is overhauled but investors remained concerned about the impact of the Trump administration's proposal to end discounts from drugmakers.
By Tamara Mathias and Manojna Maddipatla
(Reuters) - UnitedHealth Group Inc said on Tuesday it expects minimal impact to its margins if the rebate system is overhauled but investors remained concerned about the impact of the Trump administration's proposal to end discounts from drugmakers.
Shares of the company fell 4 percent and dragged down those of rivals Anthem Inc, Centene Corp, Humana Inc and Cigna Corp.
"It goes back to the political pressure on the managed care area," Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta said.
"It remains a wild card even though they are proving that their business model is good and are producing good results."
The healthcare sector has come under pressure after the U.S. government in January proposed a rule that would overhaul the use of drug company rebates in government-run healthcare plans.
Adding to investor concerns, U.S. Senator Bernie Sanders recently unveiled the latest version of his "Medicare-for-All" plan that would eliminate private insurance and shift all Americans to a public healthcare plan.
UnitedHealth Chief Executive Officer David Wichmann said some proposals being discussed represent a "wholesale disruption of American healthcare" that would impact the economy and jobs without improving patient access.
On the potential impact from the proposed change to the rebate rule, the company said discounts they currently receive are mostly passed on to clients.
"Ninety percent of what we manage is generic (drugs) with no rebates," said John Prince, a senior company executive.
"Within our total client base, 98 percent of our discounts are passed on to our clients."
Analysts said that despite the recent slump in shares, fundamentals of the industry are still on track.
"But a negative sentiment around the sector is, in the short-term, more than offsetting what we see as a continued positive fundamental trajectory for UnitedHealth," Stephens Inc analyst Scott Fidel said.
UnitedHealth on Tuesday raised its full-year adjusted earnings forecast to between $14.50 and $14.75 per share from its prior view of $14.40 to $14.70.
Optum, the company's fastest-growing unit which houses its pharmacy benefits business, brought in sales of $26.36 billion in the quarter, a jump of nearly 12 percent from a year earlier due to higher prescription volumes.
The company reported adjusted earnings of $3.73 per share, beating estimates of $3.60 per share, according to IBES data from Refinitiv.
Total revenue rose 9.3 percent to $60.31 billion, ahead of estimates of $59.71 billion.
(Reporting by Tamara Mathias and Manojna Maddipatla in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Shounak Dasgupta and Anil D'Silva)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.