The company’s medical-loss ratio, which shows the percentage of premiums paid out for patients’ care, rose to 87.6% in the fourth quarter, the health insurer said Thursday. Investors view a lower number more favorably.
Higher medical expenses combined with stricter government payment policies have pressured the earnings of US health insurers for more than a year. UnitedHealth’s results show those trends haven’t abated. The company affirmed its outlook for 2025 issued six weeks ago and said the higher costs are reflected in its guidance.
The fourth-quarter medical costs were well ahead of even recently increased estimates, RBC Capital Markets Ben Hendrix said in a research note. “Investors are going to want comfort from management this morning” that the company’s outlook for the measure in 2025 is on target, he said.
UnitedHealth, which operates the largest US health insurer, is the first company in the sector to report results and seen as a bellwether for the industry. The company said specialty drugs and hospital billing practices drove up medical costs, factors the company called out in October.
Still, its adjusted earnings were above Wall Street’s expectations in its first financial statement since a top executive was killed in New York last month. Profit was $6.81 a share in the quarter, the company said, compared with the $6.71 average estimate of analysts surveyed by Bloomberg. Revenue of $100.8 billion was slightly lower than projections.
UnitedHealth was struck by tragedy when one of its top executives was murdered Dec. 4 outside an investor conference in New York. The company’s earnings call this morning will be its executives’ first public remarks since the incident. The shooting and online reaction to it focused attention on industry practices like claims denials and prior authorizations — as well as its profits — and heightened security concerns.
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