UNH UnitedHealth Group Inc

By Matt Grossman and Anna Wilde Mathews 

UnitedHealth Group Inc. recorded a smaller profit for the last quarter of 2020 as the company saw rising medical costs tied to Covid-19.

The Minnetonka, Minn., health-care company, the parent of insurer UnitedHealthcare as well as the Optum health-services business, said Wednesday that the pandemic dragged on revenue growth from commercial insurance customers last year as its economic fallout disrupted the labor market. But revenue grew overall for the company's insurance business in the year amid expansion of its programs to serve communities and seniors.

Fourth-quarter revenue for UnitedHealth climbed to $65.47 billion, up from $60.9 billion in the same quarter a year earlier. Analysts surveyed by FactSet had forecast revenue of $64.96 billion.

UnitedHealth's revenue from premiums grew to $50.58 billion, from $47.63 billion a year earlier. The company also logged higher revenue from products, services and investment income than it did in the year-ago quarter.

As more people returned to medical providers for care that they had avoided or postponed earlier in the pandemic, UnitedHealth's costs rose. UnitedHealthcare also saw rising medical expenses tied directly to Covid-19.

Costs from Covid-19 represented 11% of health-care activity in the fourth quarter, the company said during a call with analysts. Inpatient care spending rose over the course of the quarter. Of the 65,000 Covid-19 admissions during the quarter, about half were in December, while just 20% came in October.

UnitedHealth posted fourth-quarter net income of $2.21 billion, or $2.30 a share, compared with $3.54 billion, or $3.68 a share, in the same period a year earlier.

On an adjusted basis, UnitedHealth's profit was $2.52 a share. Analysts surveyed by FactSet had forecast an adjusted profit of $2.41 a share.

Revenue from Optum grew in the quarter as the number of customers served rose by 2.1% to 98 million and as revenue per customer jumped 29% year over year. Prescription volume under the company's OptumRX business started to return to more normal levels as more health-care services returned after a lull earlier in the pandemic.

Optum's quarterly revenue was $35.9 billion, up from $29.8 billion a year ago.

Earlier this month, UnitedHealth agreed to pay roughly $8 billion to acquire Change Healthcare Inc., a health-care technology company that it said it plans to merge into Optum.

UnitedHealth said it expects its full-year profit in 2021 to be between $16.90 a share and $17.40 a share, or $17.75 a share to $18.25 a share on an adjusted basis. That estimate includes a negative effect of $1.80 a share from coronavirus-related concerns, UnitedHealth said, such as testing and treatment costs, deferred care from last year and broader economic factors.

During the call with analysts, UnitedHealth said it expected overall Covid-19 care costs in 2021 to be similar to the total for 2020.

Write to Matt Grossman at matt.grossman@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

January 20, 2021 10:51 ET (15:51 GMT)

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