Diversified health and well-being company UnitedHealth Group Inc. (UNH) on Thursday posted higher profit for the fourth quarter, reflecting strong performance from its health services businesses, and public and senior health benefits programs. Further, the company confirmed earnings forecast for the full year 2010.
The Minnetonka, Minnesota-based company's fourth-quarter net income was $944 million or $0.81 per share, compared to $726 million or $0.60 per share in the year-ago quarter.
On average, 20 analysts polled by Thomson Reuters expected the company to post earnings of $0.73 per share. Analysts' estimates typically exclude special items.
Total revenues for the recent quarter advanced to $21.8 billion from the previous year's $20.5 billion, and surpassed the $21.66 billion revenue consensus estimate of nine Wall Street analysts.
Stephen Hemsley, president and chief executive officer of UnitedHealth, said, "The fourth quarter showed continued momentum in health services businesses and public and senior health benefits programs, as well as ongoing success in containing medical and operating costs. This focus on affordability for customers, coupled with our ability to consistently drive practical innovation, will be increasingly important as the need for access to more affordable, better quality health care continues to grow."
The company's Health Benefits businesses generated quarterly earnings from operations of $1.15 billion, down from the prior-year's $1.27 billion. Revenues for this segment rose to $20.20 billion from $19.08 billion in the same quarter of last year.
Further, the company noted that the fourth quarter results for UnitedHealthcare included net enrollment decreases of 45,000 people in risk-based benefit plans and 85,000 people in fee-based programs. Absent employment attrition at continuing clients, the business would have posted net growth of 40,000 people in total in the fourth quarter.
Health Services businesses fetched fourth-quarter earnings from operations of $425 million, an increase from $333 million in the prior-year quarter. Combined revenues from the segment were $5.7 billion, up from the $5.5 billion reported a year earlier.
Fourth-quarter OptumHealth earnings from operations declined to $164 million from $177 billion reported last year, while revenues advanced to $1.43 billion from $1.31 billion in the comparable quarter of the previous year.
Ingenix's earnings from operations totaled $74 million, compared to $76 million a year ago, and revenues amounted to $536 million, up from the previous year's revenue of $426 million. Prescription Solutions generated quarterly earnings from operations of $187 million, versus $80 million last year, and revenues of $3.78 billion, an increase from $3.12 billion reported a year earlier.
For the full year 2009, the health insurer reported net income of $3.82 billion or $3.24 per share, compared to $2.98 billion or $2.40 per share last year. Analysts expected the company to report earnings of $3.16 per share for the full year.
Annual revenues for fiscal 2009 increased to $87.1 billion from $81.2 billion reported in the year ended December 31, 2008. Eleven Wall Street analysts' consensus revenue estimate of $86.90 billion for 2009.
Looking ahead, the company confirmed its outlook for 2010 earnings in the range of $2.90 - $3.10 per share and cash flows from operations of $4.0 billion - $4.4 billion. Twenty one analysts are looking for earnings of $3.06 per share for fiscal 2010.
Among UnitedHealth's rivals, Aetna Inc. (AET) is slated to release its fourth-quarter results on February 5, with analysts projecting earnings of $0.42 per share on revenues of $8.65 billion. The company said last month that it expects to incur an after-tax fourth-quarter charge of about $60 million - $65 million, on previously announced job cuts and real estate consolidation.
Another peer, WellPoint Inc. (WLP) will announce its fourth-quarter results on January 27, as analysts are forecasting earnings of $1.02 per share, on revenues of $15.13 billion. While reporting third-quarter numbers, the company said it currently projects fiscal 2009 earnings to range between $5.06 and $5.12 per share, including $0.52 per share of net investment losses incurred through the first nine months of 2009 and the impairment charge of $0.28 per share recorded during the third quarter. Earlier, the company had projected full-year earnings of $5.06 - $5.12 per share, including net investment losses of $0.54 per share.
UnitedHealth shares, which have been trading between $16.18 and $36.07 in the past 52 weeks period, closed Wednesday's trading session at $34.55, down 58 cents or 1.65%.
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