UnitedHealth Group Inc. reported its earnings results on Wednesday, surprising investors and analysts with a higher than expected profit for the fourth quarter of its fiscal year. The company reported earnings of $1.5 billion, or $1.55 per share, in the quarter ended Dec. 31, up from $1.4 billion, or $1.41 per share, a year earlier. Revenue increased by 7 percent, rising to $33.43 billion. Analysts had expected a profit of $1.50 per share and revenue of $33.11 billion.
UnitedHealth is forecasting between $140.5 billion and $141.5 billion in revenue and net earnings of $6 to $6.25 per share for fiscal year 2015. Analyst are predicting revenue of $140.90 billion and net earnings of $6.17 per share for 2015, according to Thomson Reuters I/B/E/S. In premarket trading, UnitedHealth’s shares rose 2.2 percent.
The better-than-expected fourth-quarter profit in its health insurance business was helped by well-controlled medical costs and decreased inpatient hospital admissions. Low hospital and medical use has helped keep medical claims down and profits up. UnitedHealth also added many new customers to its government-paid plans.
The company reported that its Optum pharmacy management business recorded record revenue in the quarter. Revenue from the Optum pharmacy management business increased from $6.9 billion a year earlier to $8.5 billion in the latest quarter.
A good measure of an insurer’s health is its medical care ratio, or the amount spent on medical claims compared with the insurance premiums paid to the company. UnitedHealth reported a medical care ratio of 79.8 percent for the fourth quarter, better than the 81.2 percent reported a year earlier.
The healthcare system in the United States has recently undergone major reform under the Affordable Care Act. The law has brought many changes to health insurers, including higher fees and taxes as well as the creation of a new individual healthcare insurance market. UnitedHealth is currently the largest health insurer in the United States. It seems to be weathering the changes just fine.
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