By Michael Calia
UnitedHealth Group Inc. reported a better-than-expected 5.8%
increase in earnings for its December quarter, as the health-care
company continued to benefit from revenue growth in premiums
outpacing medical costs.
Shares of UnitedHealth rose 1.3% in premarket trading to
$107.01, which would represent a new all-time high for the
stock.
UnitedHealth, like its fellow health insurers, has sought to
contain costs related to medical care, particularly as expensive,
high-profile treatments for hepatitis C and cancer enter the
market. Meanwhile, the company has benefited from growth in its
government-sponsored plans as well as its health-services arm.
Overall, for the period ended Dec. 31, UnitedHealth posted
earnings of $1.51 billion, or $1.55 a share, up from $1.43 billion,
or $1.41 a share, a year earlier. Revenue improved 7.4% to $33.43
billion.
Analysts had projected a per-share profit of $1.50 and revenue
of $33.1 billion.
As the biggest insurer and the first to report, UnitedHealth is
seen as a bellwether, and its views on spending trends are closely
monitored.
UnitedHealth said its medical-care ratio, a key industry metric
that reflects the portion of insurance premiums used for patient
care, fell to 79.8% in the fourth quarter from 81.2% a year earlier
and was virtually flat from the 79.7% in the third quarter.
Revenue from premiums rose 6% to $29.38 billion, while medical
costs increased 4.1% to $23.43 billion.
The company said it served 88.5 million individuals across all
of its businesses as of Dec. 31, up from 88.2 million a year
ago.
Its Medicare Advantage business added 15,000 customers year over
year, while its community and state business grew its Medicaid
enrollment by 1 million people in the past year. Fourth-quarter
revenue rose 5% in its division that includes Medicare and 29% in
the segment with Medicaid.
"The government businesses likely continued to come in better
than expected," Sterne Agee analyst Brian Wright said. "We believe
[UnitedHealth's] solid government results will boost the shares of
the Medicaid and Medicare-focused plans today."
Optum, UnitedHealth's health-services arm, saw revenue rise 23%
in the fourth quarter to $12.9 billion.
"The upside [in UnitedHealth's fourth quarter] was driven by the
company's Optum business," Mr. Wright said.
For the new year, UnitedHealth reiterated its forecast for
per-share earnings between $6 to $6.25 and revenue of $140.5
billion to $141.5 billion. Analysts polled by Thomson Reuters are
expecting earnings of $6.17 a share and revenue of $140.9
billion.
Write to Michael Calia at michael.calia@wsj.com
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