UnitedHealth Group reports 18% earnings increase

UnitedHealth Group on Tuesday reported an 18 percent increase in earnings from operations year-over-year and offered insight into the insurer's plan to expand globally in South America, as well as the future of moving into the provider space in this country.

UnitedHealth Group's $2.8 billion acquisition of Banmedica in Chile is expected to close during the first quarter, the company said.

[Also: Optum to buy DaVita Medical Group for $4.9 billion]

Banmedica, which operates health insurance and clinics, is an organization UnitedHealth has known and studied for a long time, according to Molly Joseph, CEO of UnitedHealth Global. 

"They have a strong local management team," Joseph said. "We see an opportunity to create value by combining (it) with our enterprise. We expect to close this quarter."

[Also: UnitedHealthcare, Premier strike contract deal, ending 7-month standoff]

In 2012, UnitedHealth expanded into South America with the $4.9 billion purchase of large health insurer and hospital operator Amil, in Brazil. The company followed with a string of hospital and clinic acquisitions.

UnitedHealth went in, "with pretty ambitious expectations with the business, particularly in margin improvement," Joseph said. "We fully executed on that plan."

UnitedHealth has set its sights on an attractive healthcare dynamic in emerging, private healthcare markets in four countries - Brazil, Chile, Peru and Columbia - that have a population equal to that of the United States, Joseph said. 

An acquisition in this country has been Optum's $4.9 billion deal to buy DaVita Medical Group. The deal builds OptumCare's business and represents another foray into medical care.

UnitedHealth Group CEO David Wichman indicated the move into the provider space to provide more convenient care at a lower cost, while still maintaining quality, is the future.

"This is about developing a local health system, with ambulatory surgery capacities and house calls," Wichmann said. 

In 2016, Optum's MedExpress and Walgreens Boots Alliance launched urgent care centers in certain markets. OptumRX and Walgreens partnered in pharmacy care services, managing more than 1 billion prescription drugs each year.

Wichmann said UnitedHealth will also advance its portfolio in care delivery platforms such as precision medicine and genomics.

Optum's acquisition of the healthcare business of the Advisory Board, which closed in late November is going well and has been well received in the marketplace, according to Optum CEO Larry Renfro.

"We're in the process of implementing the Optum playbook," Renfro said. "I believe it will enhance the sales pipeline." 

UnitedHealthcare has seen growth and good margins in Medicare Advantage and Medicare supplement products, the company said.

UnitedHealth Group reported operating earnings of $4 billion for the fourth quarter of 2017, compared to $3.2 billion during Q4 the year before, during its earnings call today.

For the full year, the insurance giant had $15.2 billion earnings from operations, compared to $12.9 billion in 2016, an 18 percent increase.

The insurance arm, UnitedHealthcare, reported earnings of $1.8 billion for the fourth quarter and $8.5 billion for the year, compared to $1.4 billion and $7.3 billion, respectively, for 2016.

UnitedHealthcare served 30 million people as of the end of 2017, both in the employer and individual market.

Optum, UnitedHealth Group's health services business reported Q4 earnings of $2.2 billion, compared to $1.8 billion the year prior, and for the year, $6.7 billion compared to $5.6 billion at the end of 2016.

The company revised its 2018 financial outlook to reflect the effects of the U.S. corporate tax law changes, dedicating a significant portion of the benefits to accelerating investments in data analytics, technology and innovation, it said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com