After threatening to withdraw in 2017 from health insurance exchanges created under the Affordable Care Act, citing losses from those marketplaces, UnitedHealth Group reported a 20 percent rise in revenue in 2015, to more than $157 billion. Optum, its health services platform, was a major driver of that growth, the company said in its earnings report released Tuesday.
UnitedHealth Group, which owns the health insurance company UnitedHealthcare and is the country’s largest insurer, said in November that it may cease in 2017 to sell health insurance plans to Americans through federal and state exchanges created under Obamacare, the nickname for the Affordable Care Act. It blamed a loss of $425 million from those plans, due in part to a low enrollment through those exchanges and the shuttering of half of health insurance co-operatives created under the Affordable Care Act, among other factors. At that time, it adjusted its earnings forecast, lowering it to $6 per share from previous estimates of $6.25 to $6.35, while CEO Stephen Hemsley said that had the company not sold insurance plans through the Affordable Care Act exchanges, share prices would have exceeded $6.40.
The January earnings report said that Optum’s revenues grew 42 percent in 2015, while UnitedHealthcare’s revenues grew 10 percent. Overall, the company said it had seen broad-based growth and an expanding share of the market, noting that “in 2015, UnitedHealthcare grew to serve more people while effectively managing for better outcomes at lower health care costs on behalf of its clients.”
Year-over-year earnings margins declined to 3.7 percent, “due to the mix effect of strong growth in pharmacy care services and losses on individual exchange-compliant products and one state Medicaid contract,” the earnings report said. It also said that its tax rate had risen in 2015 to 42.6 percent for the full year, citing “higher levels of nondeductible Affordable Care Act fees.”
UnitedHealth Group’s projections for 2016 included estimated revenues of more than $180 billion. It projected growth in earnings per share of $7.60 to $7.80.