UnitedHealth Group beat earnings expectations, bringing in
earnings of $19.7 billion The health insurance giant saw its margins grow
across most its business segments, though pharmacy and health services branch
Optum saw the fastest growth, at 13.7 percent.
By ELISE REUTER / Jan 16, 2020 at 2:36
AM
In a
year when healthcare costs continued to increase,
UnitedHealth Group reported better-than-expected results at the end
of 2019. The company reported earnings of $19.68 billion in 2019, up 13 percent
year-over-year. UnitedHealth saw improving margins in
most of its business segments, with its Optum segment reporting double-digit
growth across the board. The company also managed to grow its already large
presence in the Medicare Advantage market, despite several new competitors.
Overall,
UnitedHealth Group’s revenues fell below expectations, at $242.15 billion,
though they were still up 7 percent form 2018. As with previous years, the
amount it collected in premiums has continued to creep up. In 2019,
UnitedHealth Group collected $189.7 billion. The prior year, it collected
$178.1 billion.
UnitedHealth
Group also reported a slightly higher medical care ratio, or the amount of
premiums paid out for healthcare services in 2019. UnitedHealth reported a
ratio of 82.5%, up from 81.6 % in 2018.
The
company’s flagship health insurance business, UnitedHealthcare, saw growth in
its Medicare Advantage and commercial plans. The segment brought in $193.8
billion in revenue last year, up 5.6 percent. Earnings increased by a little
more than 13 percent to $10.3 billion. The company reported adding 845,000 people
to its commercial plans, and 325,000 to its Medicare Advantage plans.
In an
earnings call with investors, UnitedHealth Group CEO David Wichmann said the
company saw its strongest ever Medicare Advantage enrollment going into the new
year.
“Within
our Medicare Advantage offerings including dual-eligible growth, we expect to
serve nearly 700,000 more people in 2020,” he said.
Pharmacy
and health services segment Optum also had a big role in the
company’s results this year. Optum’s revenues, at $113 billion, were up 11.5%
from last year. It also saw double-digital earnings growth, up 13.7% at $9.4
billion. All three of Optum’s segments saw double-digit earnings growth, even
as its pharmacy business lost an unnamed, lost client.
Optum
CEO Andrew Witty added that the company saw its strongest ever sales for its
pharmacy benefit services, with the 2020 selling season for pharmacy benefit
services nearly at an end.
Investors
also asked about Optum’s recently announced acquisition of
struggling specialty pharmacy Diplomat Pharmacy, a deal that they hope will
boost the company’s bottom line. It’s not the company’s largest deal, valued at
$300 million, but executives said it would complement PBM OptumRx’s existing
services.
“It
will be nicely accretive to us. Unfortunately, it also comes with a great deal
of integration costs, most of which will hit 2020 as well,” Wichmann said.
OptumRx
CEO John Prince added that the company pursued the deal because he thought it
could help the company better serve patients with complex diseases in oncology
and immunology, as well as provide Diplomat’s specialized infusion therapy.
“When
you look at the capabilities of Diplomat around specialty pharmacy and
infusion, it fits well with the strategy of OptumRx focused on these unique
populations that need better volume, helping improve their drug cost, improving
their health outcomes and overall value of care and doing it in a compassionate
way,” Prince said.
Shares
of UnitedHealth Group’s stock increased modestly after the earnings report,
from $289.02 at market open on Wednesday to $296.41 at market close.
No comments:
Post a Comment