Growth in UnitedHealth Group’s health services business Optum helped the health insurance company beat Wall Street estimates for the fourth quarter ended Dec. 31, according to Reuters.
Five things to know:
1. Revenues for Optum, which is UnitedHealth’s fastest-growing unit and includes an in-house pharmacy benefits manager, topped $100 billion for the first time in the year ended Dec. 31. Optum grew revenues by 11.1 percent year over year to $101.3 billion, the company said Jan. 15.
2. While Optum may face heightened competition this year after Aetna and Cigna scored deals with large benefit managers, Piper Jaffray analyst Sarah James told Reuters: “We view [the Optum results] as a positive sign given the increasingly competitive nature of the pharmacy benefits management market. We believe 2019 could be a big year at OptumHealth … and see potential for specialty [drugs] to double earnings by 2021.”
3. For the fourth quarter, the country’s largest health insurer posted $27.56 billion in revenues from its Optum unit, up 13 percent year over year.
4. Still, UnitedHealth’s medical care ratio — or the amount of premiums used to cover medical expenses compared to overhead costs — fell short of expectations at 82.2 percent, according to Reuters. Higher costs in UnitedHealth’s government-sponsored Medicaid business were partially to blame, analysts told the publication.
5. UnitedHealth’s insurance business, UnitedHealthcare, increased sales by 11.1 percent in the fourth quarter, for a total of $46.2 billion. Net earnings to shareholders fell 16 percent to $3 billion in the fourth quarter, compared to $3.6 billion a year prior.