Following a Medicare open-enrollment period that included the company’s debut in Minnesota, UnitedHealthcare officials said Tuesday that the health insurer expects in 2019 to add more than 400,000 Medicare Advantage enrollees across the country.
UnitedHealthcare was already the nation’s largest provider of Medicare Advantage plans, a newer form of coverage where enrollees opt to receive their government benefits through a private health insurance company.
At the end of last year, 4.9 million people were enrolled in the company’s MA health plans. Government data show that UnitedHealthcare enrolled about 2,300 Minnesotans in Medicare Advantage plans this month.
“We completed a strong Medicare Advantage enrollment season last month and are on track to achieve 2019 growth within the 400,000 to 450,000 range of expectations,” said Steve Nelson, an executive vice president at parent company UnitedHealth Group, during a conference call.
Shares of UnitedHealth Group closed up more than 3 percent in trading Tuesday after the Minnetonka-based health care giant beat analyst expectations for fourth-quarter profit on continued growth at its Optum division for health care services.
For the first time, annual sales at Optum hit the $100 billion mark, company officials said Tuesday, as the division’s operating earnings for the year grew more than $1.5 billion, or 23 percent, to $8.2 billion.
Optum provides patient care through medical practices, surgery centers and urgent care clinics. The division sells data and IT consulting services to doctors and hospitals. Optum also is one of the nation’s largest pharmaceutical benefit managers (PBMs), which handle the pharmacy portion of insurance benefits for health plans.
The PBM business faces renewed competition since large health insurance rivals Aetna and Cigna are merging with large pharmaceutical benefit managers CVS and Express Scripts, respectively. UnitedHealth Group Chief Executive David Wichmann said Tuesday of the new competition: “We’re not going to underestimate it, but we also remain highly confident in our own capacities to compete and continue to grow and manage our business.”
Full-year 2018 revenue at Optum, which is based in Eden Prairie, grew 11 percent to $101.3 billion.
By the end of the fourth quarter, UnitedHealthcare saw health insurance membership in the U.S. decline slightly from the third quarter to just under 42.9 million people. The reduction was more than offset by growth in the company’s health plan membership in South America, resulting in 49 million total members at year’s end in the company’s worldwide health insurance products.
UnitedHealthcare in 2019 is making a much bigger play for business in Minnesota, with product offerings for more employer groups as well as the debut of Medicare Advantage plans here.
Minnesota’s Medicare market is undergoing a shake-up since more than 300,000 state residents last year were enrolled in a type of Medicare health plan that’s being eliminated across 66 counties this year. UnitedHealthcare elected to sell Medicare Advantage plans in just nine counties, with the government data showing Hennepin County as the biggest single source of Minnesota enrollment this month.
UnitedHealthcare did not provide state-level specifics on the Medicare numbers, but Brian Thompson, the company’s chief executive for the Medicare business, told investors: “Our growth does suggest some share gain again, which would be the fifth year for us consecutively.”
Across all lines of the health insurance business, medical costs during the fourth quarter came in higher than expected, analysts pointed out during the conference call. UnitedHealthcare officials attributed the increase to high medical and operating costs in a few states where the company runs managed care organization for Medicaid programs, which provide coverage for many people under age 65 with low incomes.
Wichmann said the company is taking steps so the Medicaid business in future years hits the company’s target profit margin of 3 percent to 5 percent.
“I’d like to see us get into the bottom end of that range in 2019,” he said. “We’ll definitely be within that range solidly in the 2020 time period.”
For 2018, UnitedHealth Group overall generated $226.2 billion in revenue. UnitedHealth is Minnesota’s largest publicly traded company and employs about 18,000 people in the state.
During the fourth quarter, UnitedHealth Group posted $3 billion in earnings on $58.4 billion of total revenue, with profit slipping from $3.6 billion in the year-ago quarter. The results from the comparable period in 2017 were boosted by a favorable noncash revaluation of deferred tax liability with the federal government’s tax overhaul. Excluding the tax impact, the net adjusted margin grew to 5.2 percent, UnitedHealth said.
Adjusted earnings per share, which removes one-time factors, came in at $3.28 per share, 7 cents better than expected among analysts surveyed by Thomson Reuters.
The company affirmed its financial guidance for 2019 including net earnings of $13.70 to $14 per share, and adjusted net earnings of $14.40 to $14.70 per share.
On Tuesday, UnitedHealth Group shares traded up $8.81 to $256.87.
Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck