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UnitedHealth Group 2012 earnings up 8% to $5.5 bln

Leading healthcare company UnitedHealth Group reported 2012 earnings of more than $5.5 billion on $110.6 billion in revenue, an 8% increase in the earn...

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|Jan 18|magazine5 min read

Leading healthcare company UnitedHealth Group reported 2012 earnings of more than $5.5 billion on $110.6 billion in revenue, an 8% increase in the earnings and 9% increase in the gross revenue from 2011.

The net earnings for the company’s fourth quarter, which ended Dec 31, were $1.2 billion or $1.20 per share, which was in line with Wall St. analyst estimates.

The executives of the company pointed to an increase in premiums as the primary drivers of the 2012 results, with the added benefit that medical costs did not rise as rapidly last year as UnitedHealth had forecast.

The analysts also said, “Overall a solid quarter with few surprises, but less impressive than the company’s performance earlier in the year.” They also said, “On the positive side, the healthcare company noted medical cost trend came in below 5.5% compared to its 3Q commentary that trend was running at 5.5%.”

The company did not see the fourth quarter medical costs increase in the fourth quarter by 12% to $20.8 billion. Executives were of the view that the performance of the company’s health services business Optum and its three divisions that rose by 65% was particularly strong.

The company also significantly increased its membership to 40.9 million, with 4 million new members alone coming from its acquisition earlier in the year of Brazil’s largest insurance company Amil Participacoes S.A. for $3.5 billion.

The healthcare company’s estimates for 2013 revenues remained at $123 billion to $124 billion and net earnings in the range of $5.25 to $5.0 per share per prior guidance.

The market’s reaction to the company earnings was tepid, with UnitedHealth shares trading up 28 cents to $53.94, an increase of about .5 percent or roughly in line with the daily movement of the broader markets.

UnitedHealth Group is a diversified healthcare company based in Minnesota, USA. It offers spectrum of products and services through two operating businesses United Healthcare and Optum. The company is the parent of UnitedHealthcare, the largest single health carrier in the U.S.