UnitedHealth Group's 4Q profit rises 30 percent

Managed care company UnitedHealth Group said Thursday its fourth-quarter profit jumped 30 percent on higher premium revenue compared to the final quarter of 2008, when the insurer incurred a hefty legal settlement charge.

The Minnetonka, Minn., insurer earned $944 million, or 81 cents per share, in the three months that ended Dec. 31. That's up from $726 million, or 60 cents per share, in the same period of 2008.

At the end of 2008, UnitedHealth incurred a charge of 18 cents per share to resolve a class-action lawsuit over out-of-network medical services. The insurer paid $350 million to settle litigation involving pricing databases operated by its Ingenix subsidiary.

For the final quarter of 2009, revenue rose 6.5 percent to $21.78 billion. A 6.2 percent jump in premium revenue to $19.7 billion accounted for most of that growth.

Analysts surveyed by Thomson Reuters forecast a profit of 73 cents per share on $21.72 billion in revenue.

Goldman Sachs analyst Matthew Borsch called the insurer's results "very solid" in a research note and said they bode well for other managed care companies scheduled to report earnings. UnitedHealth is the largest commercial health insurer based on revenue and the first managed care company to report quarterly earnings. It is seen as a bellwether for the sector.

Leerink Swann analyst Jason Gurda called the performance a "modest positive."

"The company appears to have exceeded expectations based on a milder-than-originally-anticipated H1N1 flu season and continued strong growth in its Medicare and Medicaid business," Gurda said in a research note.

Enrollment in Medicare and Medicaid plans rose 12.5 percent to just under 7.4 million people.

But the company's higher-margin commercial business continued dropping during the quarter. It shed 6.5 percent to end at just over 24.6 million people. That segment consists mostly of employer-based and individual health plans.

UnitedHealth and other insurers have struggled with slumping commercial enrollment due to rising unemployment in the recession.

For the full year, profit rose to $3.82 billion, or $3.24 per share, from $2.98 billion, or $2.40 per share, in 2008. Revenue rose to $87.14 billion from $81.19 billion.

Looking ahead, the company reaffirmed its outlook for 2010 profit between $2.90 and $3.10. Analysts expect $3.06 in profit in 2010.

In premarket trading, shares of UnitedHealth changed hands at $34.94, up 39 cents from Wednesday's close.

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AP Business Writer Damian Troise contributed to this story from New York.

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