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Wednesday, Jan 21 2015

Full Issue

Higher Premiums, Controlled Medical Costs Drive UnitedHealth Profit Up

Earnings for the large insurer rose 6 percent, with revenue for the last quarter of 2014 topping $33 billion -- beating Wall Street expectations.

UnitedHealth Group Inc. said results in its December quarter topped expectations as nearly all of its segments posted revenue growth. Like its fellow health insurers, UnitedHealth has sought to contain costs related to medical care, particularly as expensive, high-profile treatments for hepatitis C and cancer enter the market. Last month, in a bid to explore expense-controlling options, the company unveiled a test program in which it will pay MD Anderson Cancer Center a flat rate for a year’s worth of treatment for certain patients. (Calia, 1/21)

The company's premium revenue rose 6 percent to $29.38 billion in the quarter ended Dec. 31, while overall medical cost trends remained well in control, with decreased inpatient hospital usage per person, the company said. UnitedHealth's shares were up 2.2 percent in premarket trading. The company reported a medical care ratio, or the amount it spends on medical claims compared with the insurance premiums that it brings in, of 79.8 percent. It was 81.2 percent a year earlier. (Humer and Penumudi, 1/21)

Revenue for the quarter was $33.43 billion, compared with $31.12 billion during the same quarter a year earlier. Revenue for the year was $130.47 billion, compared with $122.49 billion in 2013. The company said an anticipated decline in its customer base served through commercial benefits — health care offered by employers — was more than offset by growth in its government-funded customer base of people in Medicare and Medicaid programs. (Sturdevant, 1/21)

The Minneapolis-based insurer's CEO, Stephen Hemsley, said Wednesday in a statement that the company enters 2015 "with a positive outlook and rising business momentum." That's a contrast to how UnitedHealth started 2014, filled with worry about another round of funding cuts to a key business: Medicare Advantage plans, the privately run versions of the federal government's coverage program for people who are over 65 or disabled. Wednesday's proclamation garnered strong early reviews from investors, who pushed the stock price higher before markets opened. Most investors have turned their focus to what lies ahead by the time companies report their fourth-quarter results. (Murphy, 1/21)

UnitedHealth Group shares are poised for Wednesday gains after the health insurer posted solid gains in fourth-quarter revenue and earnings and forecast better-than-expected prospects for 2015. (Strauss, 1/21)

This is part of the Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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