Quarterly results and company forecasts

UnitedHealth reported better fourth-quarter results than analysts had expected, while maintaining its December forecast for the full year 2021.

UnitedHealth Group (UNH) reported higher revenues for the 4th quarter ended 31 December, but lower earnings compared with previous quarters.

Q4 earnings per share fell 35% to $2.52, but was $0.12 higher than analysts estimate of $2.40. Earnings rose 8% to $65.5bn, also above Wall Street's average forecast of $65.14bn.

UnitedHealth's Optum division posted strong revenue growth of 21%, bringing in the biggest profit for the company. Optum provides data analytics, productivity enhancement, overall cost reduction and optimization services to consumers in the healthcare industry.

UnitedHealth's $13bn acquisition of Change Healthcare (which took place in early January) is expected to be the biggest revenue gain. (which took place in early January) should subsequently further strengthen Optum's data analytics services. Assuming the deal closes in the second half of 2021, as expected, UnitedHealth expects the acquisition to add around $470m to its profits in 2022.

The largest US insurer said its profits were impacted by a recovery in Americans demand for healthcare services and rising costs associated with its programmes to make testing and treatment from Covid-19 more accessible to customers.

With many clinic visits still delayed because of the coronavirus pandemic, the insurer could see an increase in referrals after the pandemic ends. The closure of a large number of jobs in the US is now reducing the number of insurances, which is also affecting the revenues and profits of insurance companies.

Company forecasts

UnitedHealth Group maintained its FY2021 earnings per share forecast in the range of $17.75-$18.25, which includes a decrease of $1.80 due to treatment costs and testing related to Covid-19. At the same time, the average value of the projected range is slightly lower than analysts estimate of $18.18.