Optum to be UnitedHealth’s main revenue generator again in 2021

UnitedHealth Group’s fourth-quarter profits soared as the largest U.S. health insurance provider moved deeper into delivering care and paying bills.

The healthcare giant said Wednesday that operating income from its Optum unit rose nearly 10% in the quarter to $3.4 billion. Optum operates one of the largest pharmacy benefit management companies in the United States and provides care through its Optum Health network of physicians, clinics and surgery centers.

The business served 100 million people last year, and revenue per customer rose by a third.

Operating income, excluding interest charges and taxes, also soared on the company’s UnitedHealthcare insurance side, which added more people through government-funded Medicare Advantage and Medicaid coverage. The business now reaches over 50 million people.

Company executives said Wednesday that COVID-19 costs in the quarter were in line with expectations and balanced by a decline in doctor visits and other care.

A surge in cases of the omicron variant of the virus came late in the quarter and has since boosted patient hospitalizations. But UnitedHealth said the severity of cases requiring hospitalization appeared to be low so far.

Overall, UnitedHealth Group’s revenue in the final quarter of 2021 was $4.07 billion, up from $2.21 billion in the previous year.

Excluding one-time benefits and charges, earnings per share came in at $4.48, 18 cents above Wall Street expectations, according to a Zacks Investment Research survey.

Revenue rose more than 12% to $73.74 billion, also beating expectations.

UnitedHealth’s Optum Health business works with more than 60,000 physicians to operate primary, specialty and urgent care clinics and surgical sites.

The company said it generated more revenue per customer as it expanded and moved more patients to value-based care. This involves reimbursement of doctors and other care providers based more on patient performance than on each service provided.

UnitedHealth and rivals like pharmacy chain and insurer CVS Health are offering more care to keep patients healthier and cut down on expensive care like hospitalizations.

This approach can bring in more revenue on the care delivery side of their business, while also reducing costs on the insurance side.

Overall, Optum contributed about half of UnitedHealth’s $24 billion in operating income last year.

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For 2022, the company reiterated its forecast for adjusted EPS of between $21.10 and $21.60 on revenue of $317 billion to $320 billion.

Analysts on average expected earnings of $21.63 per share on revenue of $316.76 billion, according to FactSet.

UnitedHealth shares rose 2 percent to $470.40 on Wednesday, while the Dow Jones Industrial Average, to which UnitedHealth belongs, edged up.

Shares of UnitedHealth Group Inc. topped $500 for the first time late last year, setting an all-time high for the Minnetonka, Minnesota-based company.

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