By Tess Stynes
UnitedHealth Group Inc. on Thursday said its first-quarter
earnings fell 7.8%, though the health insurer's membership ranks
grew year over year.
UnitedHealth is the first major health insurer to report its
results for the latest quarter, the first period to reflect the
Affordable Care Act. Planned reductions in government funding for
Medicare Advantage and other provisions of the health law are
expected to affect the managed-care provider's performance this
year.
UnitedHealth reported a profit of $1.1 billion, or $1.10 a
share, down from $1.19 billion, or $1.16 a share, a year earlier.
Revenue rose 4.5% to $31.7 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.09 and revenue of $31.99 billion.
UnitedHealth said provisions and newly effective taxes related
to the Affordable Care Act and a reduction in government spending
known as the sequestration reduced per-share earnings in the latest
period by nearly 35 cents.
"We performed steadily in the first quarter, with continued
momentum from our Optum health services platform and year-over-year
growth across our UnitedHealthcare health benefits platform offset
by headwinds from new ACA taxes and Medicare Advantage funding
deficiencies," Chief Executive Stephen Hemsley said.
The company said that, as expected, its first-quarter tax rate
of 42% increased by more than 5 percentage points owing to
provisions in the Affordable Care Act.
However, UnitedHealth also affirmed its 2014 outlook. Looking
ahead, analysts and investors likely will be watching for any
comments on how lower Medicare Advantage rates and public
health-insurance exchanges will impact its long-term outlook.
UnitedHealth is among the companies that have limited their
participation in the new health-insurance marketplaces, where
consumers shop for coverage.
UnitedHealth had improved its results recently through
membership growth. At the end of the latest period, the number of
people who had health coverage through the UnitedHealthcare
insurance business reached 44.7 million, compared with 42 million a
year earlier and 45.4 million people at the end 2013.
UnitedHealth's medical loss ratio, which reflects the portion of
premiums used to cover health claims, fell to 82.5% in the latest
quarter from 82.7% a year earlier.
Revenue at the company's UnitedHealthcare insurance business
grew 3.6% to $29.25 billion. Revenue from Optum, the company's
health-services arm, rose 29% to $11.2 billion
Write to Tess Stynes at tess.stynes@wsj.com
Access Investor Kit for UnitedHealth Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=US91324P1021
Subscribe to WSJ: http://online.wsj.com?mod=djnwires