UnitedHealth Q4 profit falls, says Obamacare is one factor

January 20 00:54 2016

The nation’s largest health insurer saw a 19% drop in fourth-quarter profit in 2015 but still ended the year exceeding analysts’ expectations. UnitedHealth (UNH) posted fourth-quarter earnings Tuesday of $1.22 billion, compared with $1.51 billion in the last three months of the previous year. Total revenue in the fourth quarter hit $43.6 billion, up 30% from the previous year’s fourth quarter.

Overall, the Minnesota-based company said revenue grew 20% year-over-year to more than $157 billion. Driving growth was the company’s Optum segment, which handles pharmacy care, clinics and other services. Optum’s 2015 revenue grew 42%, while UnitedHealthcare’s grew 10%. Health insurance is UnitedHealth Group’s core business, but offerings on the Obamacare insurance exchanges have caused financial difficulties for the company. In November, UnitedHealth warned it may pull out of the exchanges after 2016, forcing more than half a million people to find other coverage.

The company downgraded its earnings forecast, citing low enrollment growth projections and saying the Affordable Care Act gives people too much flexibility to change insurance plans. Experts say many Americans buying coverage on exchanges have tended to be sicker and use their benefits more than the general population. Overall at the end of the last quarter, UnitedHealth Group’s adjusted earnings per share were $1.40, higher than estimates from Zacks Investment Research and other analysts. The company reported full-year adjusted net earnings of $6.45 per share.

CEO Stephen J. Hemsley said in a press release Tuesday that officials are optimistic about making progress in 2016 and “delivering the highest quality experience for those we are privileged to serve.” “These efforts are reflected in continuing strong growth as we enter the new year,” he said.