In a year when healthcare costs continued to increase, UnitedHealth Group reported better-than-expected results at the end of 2019. The company reported earnings of $19.68 billion in 2019, up 13 percent year-over-year. UnitedHealth saw improving margins in most of its business segments, with its Optum segment reporting double-digit growth across the board. The company also managed to grow its already large presence in the Medicare Advantage market, despite several new competitors.
Overall, UnitedHealth Group’s revenues fell below expectations, at $242.15 billion, though they were still up 7 percent form 2018. As with previous years, the amount it collected in premiums has continued to creep up. In 2019, UnitedHealth Group collected $189.7 billion. The prior year, it collected $178.1 billion.
UnitedHealth Group also reported a slightly higher medical care ratio, or the amount of premiums paid out for healthcare services in 2019. UnitedHealth reported a ratio of 82.5%, up from 81.6 % in 2018.
The company’s flagship health insurance business, UnitedHealthcare, saw growth in its Medicare Advantage and commercial plans. The segment brought in $193.8 billion in revenue last year, up 5.6 percent. Earnings increased by a little more than 13 percent to $10.3 billion. The company reported adding 845,000 people to its commercial plans, and 325,000 to its Medicare Advantage plans.
In an earnings call with investors, UnitedHealth Group CEO David Wichmann said the company saw its strongest ever Medicare Advantage enrollment going into the new year.
“Within our Medicare Advantage offerings including dual-eligible growth, we expect to serve nearly 700,000 more people in 2020,” he said.
Pharmacy and health services segment Optum also had a big role in the company’s results this year. Optum’s revenues, at $113 billion, were up 11.5% from last year. It also saw double-digital earnings growth, up 13.7% at $9.4 billion. All three of Optum’s segments saw double-digit earnings growth, even as its pharmacy business lost an unnamed, lost client.
Optum CEO Andrew Witty added that the company saw its strongest ever sales for its pharmacy benefit services, with the 2020 selling season for pharmacy benefit services nearly at an end.
Investors also asked about Optum’s recently announced acquisition of struggling specialty pharmacy Diplomat Pharmacy, a deal that they hope will boost the company’s bottom line. It’s not the company’s largest deal, valued at $300 million, but executives said it would complement PBM OptumRx’s existing services.
“It will be nicely accretive to us. Unfortunately, it also comes with a great deal of integration costs, most of which will hit 2020 as well,” Wichmann said.
OptumRx CEO John Prince added that the company pursued the deal because he thought it could help the company better serve patients with complex diseases in oncology and immunology, as well as provide Diplomat’s specialized infusion therapy.
“When you look at the capabilities of Diplomat around specialty pharmacy and infusion, it fits well with the strategy of OptumRx focused on these unique populations that need better volume, helping improve their drug cost, improving their health outcomes and overall value of care and doing it in a compassionate way,” Prince said.
Shares of UnitedHealth Group’s stock increased modestly after the earnings report, from $289.02 at market open on Wednesday to $296.41 at market close.
Photo: Devrimb, Getty Images,