UnitedHealth Gains on Higher Medicare Enrollment, Repeating Guidance

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By Dhirendra Tripathi

Investing.com – UnitedHealth Group stock (NYSE:UNH) traded 1.6% higher Wednesday as strong demand for insurance and its health unit Optum’s services pulled the company’s fourth-quarter profit and revenue ahead of estimates.

The company said members in its Medicare Advantage health plans for people older than 65 or with disabilities increased by 900,000 in 2021 with strong gains in both individual and group offerings and expansion into new geographies. The total number of people served by UnitedHealthcare grew by 2.2 million in 2021.

The company reiterated its forecast of 2022 revenue coming in between $317 billion and $320 billion. Adjusted profit is seen at $21.35 a share at the midpoint of its guidance range.

UnitedHealth’s outlook for 2022 brought relief to traders spooked by Humana's (NYSE:HUM) commentary early this month. Humana expects to add 150,000 to 200,000 new members in Medicare Advantage plans this year, a sharp downward revision from the earlier estimate of 325,000 to 375,000. Humana blamed higher-than-expected terminations during the recent enrollment window for 2022 Medicare coverage for its trimmed forecast.

Medicare Advantage insurance plans are funded by the U.S. government but administered by private insurers like UnitedHealth and Humana.

Fourth-quarter revenue at the company jumped more than 12% to almost $74 billion. Earnings from operations were higher by 57% at $5.5 billion.

Revenue at Optum rose over 14% to top $41 billion to take the unit’s share in the company’s total revenue near 56%, the same as a year ago. Optum relies on analytics to sell clinical care, data consulting and services related to management of benefits within health plans.

Optum’s revenue per consumer served for the full year increased 33%. The company attributed this to it serving more people in value-based care arrangements and the continued build-out of care delivery capabilities.