Health and Science

UnitedHealth profit beats on lower medical costs due to deferred care

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Key Points
  • Health insurer UnitedHealth beat quarterly profit estimates for the fourth quarter.
  • Results were helped partly by lower medical costs due to fewer elective surgeries as hospitals made room for Covid-19 patients.
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UnitedHealth posts EPS and revenue beats for Q4

Health insurer UnitedHealth beat quarterly profit estimates for the fourth quarter on Wednesday, helped partly by lower medical costs due to fewer elective surgeries as hospitals made room for Covid-19 patients.

For the most part of last year, health insurers gained as people afraid of contracting the virus also avoided hospital visits for routine and elective medical procedures during the height of the pandemic.

UnitedHealth reported a medical loss ratio — the percentage of premiums paid out for medical services — of 79.1% in the fourth quarter, improving from 82.5% a year earlier, capped by Covid-19 testing, treatment and vaccine costs.

The company said its profit was impacted by a recovery in demand for health-care services and rise in costs related to its programs to make Covid-19 testing and treatment more accessible for its customers.

In contrast, rival Humana earlier this month said it expects potentially lower utilization of non-Covid health-care services compared to usual levels, at least in the first few months of 2021.

UnitedHealth maintained its 2021 profit forecast from December and said it expected adjusted net earnings of $17.75 to $18.25 per share, including a $1.80 per share hit due to treatment and testing costs related to Covid-19.

The company reported adjusted earnings of $2.52 per share in the fourth quarter, beating estimates of $2.41 per share, according to IBES data from Refinitiv.