By Antea Gatalica
UnitedHealth Group Inc. reported higher-than-expected quarterly earnings Thursday, but shares of the company fell on concerns over an increase in costs.
The Minnesota-based health care company posted flat net earnings of $1.6 billion, or $1.65 per diluted share, in the fiscal quarter that ended Sept. 30, beating the analysts’ consensus estimate of $1.64 per diluted share. The company earned $1.63 per diluted share in the year-ago period.
UnitedHealth Group has been spending more to achieve higher ratings under Medicare’s five-star rating program that determines how much insurers reimburse services and gives consumers a way to compare health care programs.
“Our Medicare stars improvement does come with a related increase in medical costs,” President and Chief Financial Officer David Wichmann said in a conference call with analysts.
Wichmann said star quality improvements will strengthen reimbursement rates in the coming years and develop the company’s Medicare Advantage programs.
Revenues rose 27 percent to $41.49 billion in the quarter, which included results of newly acquired businesses.
Peter Costa, senior analyst at Wells Fargo, said any pressure on profit in the quarter was not worrisome in light of the company’s “improved star score results and exchange growth.”
UnitedHealth shares fell $1.90, or nearly 2 percent, to close at $120.17 Thursday.