UnitedHealth’s profit exceeds expectations on medical cost reduction despite the rise in COVID-19

(Reuters) – UnitedHealth Group Inc reported higher-than-expected fourth-quarter profit Wednesday as medical expenses fell short of Wall Street estimates even with higher spending related to the increase in COVID-19 cases in December.

For much of 2020, health insurers incurred lower health costs as people avoided doctor’s offices and hospitals out of fear or to contract COVID-19 and elective medical procedures were postponed.

UnitedHealth said benefits from deferred care was largely offset by coronavirus testing and treatment costs in the fourth quarter. Its fee was slightly reduced to $ 350.99.

Healthcare spending, which had returned to more normal levels earlier in the quarter, increased in late November and December with COVID-19 costs peaking, the company said in a conference call.

The insurer, however, reported a medical loss ratio (MLR) – the percentage of premiums paid for medical services – of 83.2% for the quarter, lower than analysts’ forecasts of 84.36%, according to Refinitiv. IBES.

Bernstein analyst Lance Wilkes called the quarter’s MLR “a positive surprise.”

Since the onset of the pandemic, COVID-19 has claimed over 401,000 lives in the United States and more than 24.1 million people have been infected with the novel coronavirus, with cases and deaths still on the rise in most of the country.

UnitedHealth said it expects cost trends related to COVID-19 in 2021 to remain similar to 2020 despite vaccination efforts.

COVID-19 accounted for about 11% of all service activities during the fourth quarter compared to about 6% in the third, CFO John Rex said.

The company reported fourth-quarter adjusted earnings of $ 2.52 per share, beating Wall Street estimates by 11 cents, according to data from Refinitiv.

UnitedHealth maintained the 2021 profit forecast issued last month for adjusted net earnings of $ 17.75 to $ 18.25 per share. This includes $ 1.80 per share in treatment and testing costs related to COVID-19.

Reportage by Manojna Maddipatla in Bengaluru; Additional reporting by Caroline Humer; Editing by Shinjini Ganguli and Bill Berkrot