Talk of Flu Season, OptumInsight Colors UnitedHealth 4Q Earnings Call

by Leslie Small

 

During the company’s recent conference call to discuss fourth-quarter and full-year 2022 financial results, UnitedHealth Group executives touched on subjects ranging from the historically bad flu season to the future of the company’s data analytics division. All in all, equities analysts declared the health care giant to be on strong footing as 2023 gets underway — a positive sign, they say, for a managed care sector that tends to follow where UnitedHealth leads.     CEO: Flu impact ‘almost not noticeable’   During UnitedHealth’s Jan. 13 earnings call, one repeated topic of discussion was the effect of respiratory illnesses like influenza, which hit communities in the U.S. harder and earlier than usual.   Brian Thompson, CEO of the company’s UnitedHealthcare insurance division, acknowledged that “we certainly saw that spike” in respiratory illnesses, but added that “we have now seen that start to wane for...five consecutive weeks.” All told, there was “not a meaningful impact” for UnitedHealthcare associated with the increased illness levels, he said.  Later, when an analyst asked how much of the elevated costs tied to respiratory illnesses “was related to the hospital inpatient setting,” UnitedHealth CEO Andrew Witty further downplayed their impact. Their effects were “immaterial…in the grand scheme of the health care costs of the U.S. — almost not noticeable,” he said.   UnitedHealth’s MLR for the quarter, 82.8%, was just slightly above (i.e. worse) the Wall Street consensus estimate of 82.7%. But the firm ended the year with an 82.0% MLR, which was consistent with projections made during its annual Investor Day.   How will Change transform OptumInsight?   In their notes to investors after UnitedHealth’s call, equities analysts also highlighted the company’s discussion of the future of its OptumInsight division, which is currently integrating the Change Healthcare business after closing a $13 billion acquisition.   Witty said during his prepared remarks that “2023 will see the emergence of an enhanced OptumInsight, bringing to life the opportunities that the legacy organizations from Optum and Change create, an acceleration of how technology can be used to health care providers and ultimately patients within the overall health system.”    SVB Securities analysts observed that “integration costs associated with the recent Change acquisition appear to be a bit larger than expected.”   “Assuming OptumInsight continued to experience core growth of 11% [year over year], which is where it has trended in 2022, we estimate UNH has incurred $160m in integration costs associated with the transaction,” they wrote.   Jefferies analysts, meanwhile, wrote that “having a business that counterbalances Health Benefits sounds good until headwinds to the business (i.e. lower inpatient volumes and large drags for growth implementations) become structural. [Change Healthcare] needs to...add a growth [opportunity] not tied to volumes.”

 

From Health Plan Weekly

 

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