The UnitedHealth Group, the nation’s largest health insurer, reported a slight drop in its fourth-quarter net income on Thursday as medical costs rose, but its revenue increased more than 11 percent, helped by growth in its Medicare, care management, technology and international businesses.
The company also outlined its plans to participate in the new health exchanges that will be established under the 2010 Affordable Care Act, which are expected to add millions to the ranks of the insured. It said it expected to start by participating in 10 to 25 exchanges, perhaps more, though it has no firm commitment to that range.
“We will only participate in exchanges that we assess to be fair, commercially sustainable, and provide a reasonable return on the capital they will require,” the company’s chief executive, Stephen J. Hemsley, told analysts on a conference call.
The government-subsidized exchanges will offer insurance plans sold by private insurers like UnitedHealth. So far 17 states and the District of Columbia have received conditional approval to establish their own exchanges.
The company said its fourth-quarter profit rose to $1.20 a share from $1.17 a year earlier, as the number of outstanding shares fell. But its net income slipped 1 percent, to $1.24 billion from $1.25 billion a year earlier. Revenue rose to $28.8 billion from $25.9 billion.
Analysts had expected earnings of $1.19 a share and sales of $28.2 billion, according to a survey by Thomson Reuters.
The company said the unusual number of flu cases this year added $50 million in incremental costs, a figure analysts found reassuring.
“Over all, these results were strong, which should ease market concerns about the impact of the elevated flu season on the group,” said Michael Wiederhorn, an analyst at Oppenheimer, in a research note.
For 2013, UnitedHealth reiterated its forecast for revenue of $123 billion to $124 billion, up from $110.6 billion in 2012. It expects earnings of $5.25 to $5.50 a share, compared with $5.28 in 2012.
Analysts had been expecting earnings of $5.55 a share on revenue of $121.11 billion.
An Insurer, UnitedHealth, Reports a Slight Drop in Income
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An Insurer, UnitedHealth, Reports a Slight Drop in Income
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An Insurer, UnitedHealth, Reports a Slight Drop in Income
