By: The Associated Press January 15, 2020 2:21 pm
UnitedHealth’s fourth-quarter net income
surged 16%, and investors shrugged off a rare revenue miss to make the nation’s
largest health insurer one of the biggest gainers in Wednesday trading.
Growing Medicare Advantage coverage and fat
profits from UnitedHealth’s Optum business, which strays beyond the company’s
health insurance core, contributed to better-than-expected earnings in the
quarter.
Revenue grew 4% to $60.9 billion, just shy of
analyst projections for $60.96 billion, according to FactSet.
The insurer, a component of the Dow Jones
Industrial Average, normally tops Wall Street expectations for earnings and
revenue every quarter.
UnitedHealth brought in more than $47 billion
in insurance premiums during the quarter, but its product sales tumbled 11% to
$7.62 billion.
Product sales include the company’s pharmacy
benefit management operation, which took a hit when it lost business from Cigna
after the rival insurer bought its own PBM.
UnitedHealth earned $3.54 billion in the final
quarter of 2019, with adjusted per share profits of $3.90 per share. That’s 12
cents better than expected, according to a survey of analysts polled by
FactSet.
The Minnetonka-based company covers more than
49 million people, including 5.7 million in its international business. The
company saw Medicare Advantage enrollment climb more than 6 percent year over
year to 5.2 million people in the quarter.
Medicare Advantage plans are privately run
versions of the federal government’s coverage program for people over age 65.
Health insurance is UnitedHealth’s biggest
business. But most of its operating earnings came from its Optum segment, which
runs a growing number of clinics and urgent care and surgery centers as well as
the PBM business.
Optum pulled in $3 billion in operating
earnings, compared to $2.1 billion from the insurance side. Optum’s operating
margin topped 10%, which was more than twice as big as the insurance business.
For the full year, UnitedHealth Group Inc.
earned $13.84 billion on more than $242 billion in revenue. Adjusted earnings
per share totaled $15.11, and the insurer expects that to grow this year.
The company on Wednesday reaffirmed 2020
profit expectations that it laid out last month at its investor conference. It
forecasts adjusted earnings of between $16.25 and $16.55 per share.
Analysts expect per-share profits of $16.46
this year, according to FactSet.
Company shares climbed more than 3 percent, or
$9.27, to $297.51 while the Dow rose slightly.
The stock climbed 18% last year, with the
price reaching $300 for the first time in late December.
https://finance-commerce.com/2020/01/unitedhealth-reports-another-strong-quarter/
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