UnitedHealth topped Wall Street expectations for the fourth quarter, and the nation's largest health insurer brought an optimistic vibe for the new year as it detailed final results from 2014.
The Minneapolis-based insurer said Wednesday that it expects stronger enrollment growth from Medicare Advantage plans, a key product that had been pinched by funding cuts in recent years. It also has already gained more than 400,000 customers through its expanded presence on the health care overhaul's public insurance exchanges, and operating earnings from its Optum segment, which runs several businesses outside health insurance, climbed more than 50 percent.
"We enter 2015 with momentum from a strong 2014 finish," CEO Stephen Hemsley told analysts after the company released results.
That tone represented a stark contrast to how the insurer started 2014, filled with worry about another round of funding cuts to Medicare Advantage plans, which are privately run versions of the federal government's coverage program for people who are over 65 or disabled. UnitedHealth and other insurers also were sweating the overhaul's coverage expansions, which introduced taxes and fees along with new customers who had gone years with no insurance coverage or regular health care.
UnitedHealth said Wednesday that the Affordable Care Act delivered a hit totaling $1 billion, or about $1 per share, to its 2014 earnings But the insurer saw enough potential in the market to expand its presence from four individual exchanges to 23 in 2015.
UnitedHealth also said it expects Medicare Advantage enrollment to grow by as much as 300,000 people this year after a net gain of around 15,000 in 2014.
The insurer had said last month that it expected double-digit earnings growth in 2015, and it reaffirmed on Wednesday its forecast for earnings that range from $6 to $6.25 per share.
In the final quarter of 2014, UnitedHealth earned $1.51 billion, or $1.55 per share. That compares to net income of $1.43 billion, or $1.41 per share, the previous year.
Total revenue rose more than 7 percent to $33.43 billion.
Analysts forecast, on average, earnings of $1.50 per share on $33.09 billion in revenue, according to Zacks Investment Research.
For the full year, UnitedHealth earned $5.62 billion, or $5.70 per share, on $130.47 billion in revenue.
By the time companies report fourth-quarter results, most investors have turned their focus to what lies ahead, and UnitedHealth's outlook appeared to play well with them.
Company shares climbed more than 2 percent, or $2.52, to $108.14 in midday trading after approaching $109 to set another all-time high earlier in the session. Meanwhile, broader indexes rose only slightly. UnitedHealth is a component of the Dow Jones industrial average.
The insurer's advance follows a year in which its shares rose 34 percent, which tripled the advance of the Standard & Poor's 500 index.
UnitedHealth Group Inc. is the first health insurer to report earnings each quarter, and many analysts and investors see it as a bellwether for the sector. Competitors Anthem Inc., Aetna Inc. and Humana Inc. also outpaced the broader indexes in Wednesday trading.