Minnesota's largest
company by revenue saw quarterly profit grow 16%.
UnitedHealth
Group's fourth-quarter profit beat expectations, led by its Optum health
services that saw sizable growth from its business running clinics and
outpatient medical centers.
Minnesota's
largest company by revenue, UnitedHealth saw a profit of $3.54 billion during
fourth the quarter, up more than 16% from the year-ago period. After adjusting
for one-time factors, income of $3.90 on a per-share basis beat by 12 cents the
expectations of analysts surveyed by Refinitiv.
In
morning trading Wednesday, UnitedHealth Group shares were up more than 2%.
"Our
businesses remain strong and well-positioned for continued balanced growth by
delivering even higher levels of societal value," David Wichmann, its
chief executive, said during a conference call with investors.
Minnetonka-based
UnitedHealth Group runs UnitedHealthcare, which is the nation's largest health
insurer, as well as Optum, a health services business that includes direct
patient care, IT and health care consulting and management of pharmaceutical
benefits.
Health
insurance remains the bigger of the two business in terms of sales. During the
fourth quarter, UnitedHealthcare generated operating revenue of $48.2 billion
compared with $29.8 billion at Optum.
UnitedHealthcare
and Optum hire one another for services. Total revenue after eliminating
intercompany sales came in at $60.9 billion — about 4% better than the year-ago
period.
But
Optum during the fourth quarter accounted for a larger amount of operating
income than did the health insurance business, and posted a higher profit
margin, as well.
Optum's
clinic business grew significantly during 2019 with UnitedHealth Group's acquisition of DaVita Medical Group.
During the fourth quarter, the OptumHealth division that includes clinics
posted operating earnings of $901 million on $8.3 billion of revenue.
A
tough start to the flu season during the fourth quarter didn't have a big
impact financial results, said Dr. Wyatt Decker, the physician who runs
OptumHealth.
Optum's
clinics often are paid by health insurers to take risk for patient outcomes,
which means an unexpectedly bad flu season or any other surge in illness could
hurt financial performance if patients need more care than expected. But Decker
noted the division also includes the MedExpress chain of urgent care centers,
which are paid on a fee-for-service basis and would therefore see better
financial performance with more flu.
What's
more, the strain of flu virus circulating is generating more outpatient health
care needs, Decker said, versus costly hospitalizations.
Company
officials said fourth quarter earnings from operations at the pharmaceutical
benefits management (PBM) business called OptumRx were unusually high due to
one-time factors.
Membership
in health insurance products in the U.S. stood at 43.4 million people at the
end of December, down slightly from the end of the third quarter but up from
last year. UnitedHealthcare in recent months launched a new "site of
service" initiative designed to control costs by steering patients to
receive certain services at lower-cost surgery centers rather than the
outpatient departments in hospitals.
Such
policies from health insurers have proved controversial among hospital operators.
"We
are committed to driving significantly lower rates of health care spending
growth than the industry," said Dirk McMahon, the chief executive of
UnitedHealthcare, during the conference call on Wednesday.
UnitedHealth
Group employs 320,000 people worldwide, including about 18,000 in Minnesota.
http://www.startribune.com/unitedhealth-shares-rise-after-4q-profit-beat-expectations/567007212/?refresh=true
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