UnitedHealth Group, the nation’s largest health insurer, grew its revenue base and the number of customers it serves during the first quarter of 2014.
“We performed steadily in the first quarter, with continued momentum from our Optum health services platform and year-over-year growth across our UnitedHealthcare health benefits platform offset by headwinds from new [Affordable Care Act] taxes and Medicare Advantage funding deficiencies,” UnitedHealth Group CEO Stephen J. Hemsley said in a statement.
Net earnings were down to $1.1 billion for the quarter, or $1.10 per diluted share, compared with $1.19 billion, or $1.16 per share, during the first quarter of 2013. Analysts polled by Thomson Reuters were expecting $1.09 on average.
The Minnetonka, Minn., company had total revenues of $31.71 billion for the quarter, compared with $30.34 billion during the same period a year earlier. Premiums on health insurance policies accounted for $28.1 billion of this quarter’s revenues, compared with $27.27 billion a year earlier.
Medical expenses of customers were up to $23.2 billion for the quarter from $22.57 billion, year over year. Operating costs also rose to $5.19 billion from $4.61 billion.
The company’s UnitedHealthcare Employer & Individual business served 1.8 million more people year over year, driven by growth in services provided through TRICARE, the government funded health insurance for active duty and retired military.
UnitedHealthcare Medicare & Retirement business grew 3 percent year over year to $11.5 billion in revenue. In Medicare Advantage, a business in which the insurer had high-profile and controversial changes to its physician network, UnitedHealthcare had 120,000 customers, up 4 percent compared with the first quarter of 2013.
“Significant [Affordable Care Act] and sequestration funding cuts for seniors using Medicare Advantage products resulted in the company exiting markets, reducing product offerings, adjusting networks and reducing benefits for 2014,” UnitedHealth Group said in its earnings report. “Despite these actions, first quarter 2014 senior participation was basically stable with year end 2013, with just under 3 million seniors served.”
UnitedHealthcare had 9 percent growth in its Medicare Part D plans, which is stand-alone drug coverage, and 9 percent growth in Medicare Supplement offerings.
The company’s Optum division, which is data analytics and technology, grew to $11.2 billion in revenue for the quarter from $8.7 billion in the first quarter of 2013. Earnings from operations grew to $650 million for the quarter from the first quarter of 2013.
The total number of customers in UnitedHealthcare’s commercial business increased to 29.11 million as of March 31, compared with 27.3 million a year earlier.
It’s Medicare Advantage customer base grew to 2.99 million as of March 31 from 2.87 million a year earlier. It’s total public-sector customer base grew to 10.9 million customers at the end of the quarter from 10.09 million a year earlier.
Shares of the company were down 19 cents early Thursday morning before the markets opened to $78 from yesterday’s closing price of $78.19.