Skip to main content

UnitedHealth says quarterly profit rose, sees 2014 growth

UnitedHealth Group Inc said on Thursday implementing Obamacare and private Medicare funding cuts will eat into 2014 profit but the government-paid insurance business will drive growth as more people sign up.

UnitedHealth, the largest U.S. health insurer, reported fourth-quarter profit a beat higher than analyst expectations, but its shares and those of major competitors fell anyway as investors focused on costs.

"It's rare that United stock doesn't go down on earnings day," said Sheryl Skolnick, an analyst for CRT Capital. "I think what the Street did see was that the medical cost ratio was a bit higher than folks thought."

The company said the medical cost ratio, which reflects the percentage of premiums paid out in claims to cover customer procedures and doctor visits, was "well controlled" and within expectations. It rose 1.1 percentage points in the quarter compared with a year earlier to 81.5 percent.

UnitedHealth shares fell 2.5 percent to $73.05 while WellPoint, Aetna, Cigna and Humana also fell.

UnitedHealth said that funding cuts for private Medicare would negatively effect 2014 and that it was still in discussions with the government on the 2015 funding levels. The Centers for Medicare and Medicaid Services is due to announce a proposed funding rate in February.

"They've done their best to offset them, but there's pressures on their book, particularly in Medicare," Leerink Swann analyst Ana Gupte said.

The fourth quarter marked the beginning of sales of new individual plans created under the national healthcare reform law often called Obamacare, coverage which went into effect for the first customers on January 1.

UnitedHealth has limited its participation in selling those new plans so far to three states and provided few details about how it was going.

"We will continue to closely study the development of the individual public exchanges in 2014 and will be selective in our approaches for 2015," Chief Executive Officer Stephen Hemsley said during a conference call.

Strong growth for the company will come from expansion of Medicaid under healthcare reform law, growth in traditional Medicaid as more people sign up, and the development of programs for people eligible for both Medicare and Medicaid, he said.

The technology for HealthCare.gov, the federal website that sells plans to individuals in 36 states, has had many problems and negatively affected enrollment. The other 14 states run their own websites and some have also had issues.

UnitedHealth said it held onto more small business and individual customers during the fourth quarter than usual because it had extended some existing small group plans that were due to expire into 2014 rather than canceling them.

The Patient Protection and Affordable Care Act requires that plans that do not meet the law's benefit requirements be cancelled. President Barack Obama has asked insurers to extend those to give people more time to sign up because of technology problems and as Americans complained the new plans were too costly compared with previous coverage.

NET INCOME RISES

UnitedHealth said fourth-quarter net income rose to $1.4 billion, or $1.41 per share, from $1.2 billion, or $1.20 per share, a year earlier.

_0">

The insurer is the first to report its results in a group that also includes WellPoint Inc and Aetna Inc. Employer-based plans and government health programs, as well as a fast-growing health technology division, make up the bulk of UnitedHealth's annual sales.

_1">

UnitedHealth also added new members in its government plans for seniors and for the poor, for a total of 45,445,000 medical customers at the end of 2013.

_2">

The company said that revenue rose to $31.12 billion, up from $28.77 billion a year earlier.

_3">

Both earnings and revenue came in slightly ahead of analyst expectations, which were for earnings of $1.40 per and revenue of $31.07 billion, according to ThomsonReuters I/B/E/S.

_4">

United Health said it continues to expect revenue of $128 billion to $129 billion and earnings of $5.40 to $5.60 per share in 2014.

_5">

The company's private Medicare business, which provides managed care plans to seniors, experienced government funding cuts that decreased its profitability, UnitedHealth said.

_6">

It was helped, however, by an overall lower medical spending trend as fewer customers checked into hospital, reducing expenditure on reimbursing providers.

_7">

UnitedHealth said that profit improved in its technology business, which includes the QSSI unit that has been working on fixing problems with the federal website for new health insurance for individuals called HealthCare.gov. Optum, which includes many other health technology related businesses, had earnings from operations of $2.3 billion, up from $875 million a year earlier.

_8">

(Reporting by Caroline Humer; Editing by Rosalind Russell)

_9">

Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o