Helped by fewer medical claims and higher across-the-board revenue, UnitedHealth Group (NYSE:UNH) on Thursday revealed a stronger-than-expected 10% gain in fourth-quarter profit.
The Minneapolis-based company posted net earnings of $1.04 billion, or 94 cents a share, compared with $944 million, or 81 cents a share, in the same quarter last year, beating the Streetâ€™s view of 84 cents.
Revenue for the nation's largest managed-care company was $24.03 billion, up 10.3% from $21.78 billion a year ago, ahead of average analyst estimates polled by Thomson Reuters of $23.75 billion.
Growth was attributed by the health insurer to gains across four of its business units, including Medicare and Retirement, Community and State, Ingenix and Prescriptions. It also saw a boost from $200 million in favorable development in medical reserves established earlier in the year and $140 million in favorable prior-year reserve development.
The companyâ€™s medical-benefits ratio, or the amount of premiums used to pay patient medical costs, declined to 79.6% from 81.3% a year ago. Health insurers have benefited in recent quarters from lower medical claims costs as people visit medical professionals less often in an effort to save money.
Looking ahead, UnitedHealth sees 2011 revenues of roughly $11 billion, a reflection of strong customer retention and new growth across its businesses. It also reaffirmed its earnings guidance in the range of $3.50 to $3.70 a share.
Also on Thursday, UnitedHealth announced the promotion of executive vice president David S. Wichmann to chief financial officer. Wichmann succeeds G. Mike Mikan, who had been CFO since 2006, and will now oversee the company's information-technology businesses.