Insurers’ Stocks Bruised By Reform Efforts Despite Earnings
Despite strong performance on earnings sheets, stocks for companies like UnitedHealth Group have faltered amid uncertainty about the future shape of American health care, BusinessWeek reports. The flagging stocks don't reflect "the firms' profits, sales, or anything specific to UnitedHealth or its competitors. Rather, it's the health-care reform debate coming out of Washington."
Despite the recession, revenues for UnitedHealth were up over 7 percent, and the firm's third-quarter earnings of $0.89 per share bested expectations by $0.13. "Yet UnitedHealth shares are down more than 2% in 2009, even as the broader market is up almost 21% so far this year."
"In such an uncertain position, health insurers need to maintain maximum flexibility, says Kunal Pandya, senior analyst at the Aite Group, a consulting firm." The companies also recognize that some aspects of reform could lead to windfall earnings, such as a stringent requirement that that Americans buy health insurance (Steverman, 10/20).