UnitedHealth slumps as higher medical costs cloud Optum performance

Updated at 7:42 AM EST 

UnitedHealth Group  (UNH) - Get Free Report posted stronger-than-expected fourth-quarter earnings Friday as its Optum benefits division continued to power its top and bottom lines while offsetting a modest increase in medical costs.

UnitedHealth said adjusted earnings for the three months ending in December came in at $6.16 a share, up 15.4% from the year-earlier period and 18 cents ahead of the Wall Street consensus forecast of $5.98 a share.

Group revenues, UnitedHealth said, rose 14% to $94.4 billion, again topping analysts' estimates of a $92.4 billion tally, while Optum revenues rose 24.2% to $59.5 billion.

UnitedHealth's medical-cost ratio, meanwhile, was pegged 20 basis points higher at 83.2% for the year, suggesting a modestly larger portion of its collected premiums were paid out on insurance claims. 

For the fourth quarter, UnitedHealth's medical-cost ratio was 85%, up from 82.8% over the same period last year. Overall premiums were up 13.2% to $73.23 billion while operating costs rose 14.3% to $86.74 billion.

“UnitedHealth Group enters 2024 well prepared to build on our efforts to improve patient care and consumer experiences broadly, and to continue delivering strong and balanced growth,” CEO Andrew Witty said in a statement. 

UnitedHealth shares, a Dow component, were marked 5.3% lower in pre-market trading Friday immediately following the earnings release to indicate an opening bell price of $511.00 each.

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