Profits at UnitedHealth Group fell 40% in the fourth quarter compared with the year-ago period because of a legal settlement, but overall results were in line with expectations.
Net income in the fourth quarter was $726 million, down from $1.22 billion the same period in 2007. Officials attributed the drop in income to $350 million in legal settlements over out-of-network medical services. For the full year, profits fell 36% to $2.98 billion, down from $4.65 billion in 2007. Full-year revenue rose 8% to $81 billion, up from $75.4 billion in 2007.
Healthcare enrollment dropped by 125,000 people in the fourth quarter, but the Minnetonka, Minn.-based insurer added 800,000 medical members in 2008 to a total of 26 million people. About 420,000 people chose UnitedHealth consumer-directed health plans last year for a total of 2.7 million enrollees, an 18% increase over 2007. More than 27,000 employer groups now offer UnitedHealth consumer-directed health plans.
Stephen Hemsley, president and chief executive officer of UnitedHealth, said that the company strengthened its performance despite the challenging economic environment.
Carl McDonald, an analyst with Oppenheimer & Co., said in an investor note that UnitedHealth has set a welcome tone for other major insurerswhich will also release 2008 earnings in the coming weekswith few surprises after a roller-coaster year. There is reason to believe this could be the start of a trend, he said.