UnitedHealth medical care costs rise in fourth quarter

Investing.com -- UnitedHealth Group (NYSE:UNH) has reported a jump in medical care costs in the fourth quarter, although growth in the healthcare giant's services businesses and investments helped push adjusted earnings per share above average analyst expectations.

The group's medical care ratio -- a measure of expenditures on claims versus premiums collected -- stood at 85% in the three months ended on Dec. 31, ticking up from 82.8% in the corresponding period last year and 82.3% in the third quarter. 

For the full 2023 fiscal year, the gauge rose to 83.2% versus 82% in the prior twelve-month period, above average analysts estimates of 82.96%, Reuters reported. UnitedHealth had previously flagged that it expected the annual medical cost ratio to be at the upper end of its 82.6% target, plus or minus 50 basis points.

Health insurers have warned in recent months that an increasing number of older adults are choosing to go ahead with elective surgeries following the lifting of pandemic-era restrictions, potentially increasing expenses. 

Minnesota-based UnitedHealth provides health insurance to over 47 million customers in the U.S. via both government-backed and private plans, pharmacy benefit management and technology services.

Fourth-quarter adjusted net earnings per share of $6.16 and revenue of $94.43 billion both topped Bloomberg consensus estimates of $5.97 and $92.11B. However, analysts at Morgan Stanley described the beat as "lower quality."

Shares in industry-bellwether UnitedHealth dropped in early U.S. trading on Friday, dragging down peers like Humana (NYSE:HUM) and CVS Health (NYSE:CVS).