UnitedHealth Fourth-Quarter Earnings Top Estimates

MINNEAPOLIS (Minneapolis Star Tribune/TNS) -

UnitedHealth Group posted better-than-expected earnings for the fourth quarter, and continued to send an upbeat message to investors about the outlook for the new year.

In trading Wednesday, UnitedHealth shares rose $3.70, or 3.5 percent, to $109.32.

Minnetonka, Minn.-based UnitedHealth, which is the nation’s largest health insurer, saw $1.51 billion in earnings for the quarter ending Dec. 31, an increase of about 6 percent compared with the same period last year.

Earnings per share came in at $1.55, which was 5 cents per share better than expected by analysts surveyed by Thomson Reuters.

“We enter 2015 with momentum from a strong 2014 finish, and with more growth opportunities and fewer impediments than we have encountered over the last few years,” said Stephen Hemsley, UnitedHealth CEO, during a conference call with investors.

The rate of increase in medical costs during the fourth quarter remained relatively low, at a little less than 5.5 percent, company officials said. For the year, per-person hospital usage was down from 2013, Hemsley said.

Taxes and other costs related to the federal Affordable Care Act cut about $1 billion, or $1 per share, from UnitedHealth earnings during 2014. But growth prospects related to the health law are expected to come into focus for UnitedHealth during 2015.

The insurer is making a bigger play on health-insurance exchanges this year by selling products on government-run marketplaces for 23 states. So far, the company has seen more than 400,000 sign-ups on these exchanges, Hemsley said.

UnitedHealth expects to sell products on even more state exchanges in 2016. But the company’s plan to sell products in all parts of California through that state’s exchange were recently blocked by state regulators, who cleared UnitedHealth to sell in just a small handful of markets.

During the fourth quarter of 2014, revenue of $33.43 billion at UnitedHealth for the quarter was about 7 percent greater than last year. For 2015, the company expects revenue in a range of $140.5 billion to $141.5 billion, and earnings per share in a range of $6 to $6.25.