UnitedHealth Group reported fourth quarter and full year 2015 results. Full year 2015 revenues of $157.1 billion grew 20 percent or $26.6 billion year-over-year.
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Revenue growth was broad-based and reflected growing market demand for the company’s product and service offerings. UnitedHealthcare’s 2015 revenues grew 10 percent and Optum’s revenues grew 42 percent, with strong double-digit percentage revenue growth in each Optum segment.
Full year 2015 earnings from operations were $11 billion and adjusted net earnings were $6.45 per share, including $1.40 per share in the fourth quarter.
Full year and fourth quarter after-tax margins declined year-over-year to 3.7 percent and 2.8 percent, respectively, due to the mix effect of strong growth in pharmacy care services and losses on individual exchange-compliant products and one state Medicaid contract.
Excluding these losses from 2015 adjusted results, adjusted net earnings were $7 per share for the full year and $1.77 per share in the fourth quarter.
Full year 2015 cash flows from operations grew 21 percent year-over-year and exceeded $9.7 billion, representing 166 percent of net earnings. Fourth quarter cash flows were $3.5 billion, a strong 280 percent of net earnings.
The 2015 consolidated medical care ratios of 81.7 percent for full year and 82.7 percent in the fourth quarter were pressured by the individual exchange-compliant products. Prior year reserves developed favorably by a total of $320 million in 2015 compared to prior year reserve development of $420 million in 2014. Reserves developed favorably by a total of $250 million in the fourth quarter, compared to $100 million in the fourth quarter of last year.
The full year 2015 operating cost ratio of 15.5 percent decreased 80 basis points year-over-year due to shifts in business mix and improvements in productivity. The fourth quarter 2015 operating cost ratio of 15.1 percent improved from 17.2 percent in the fourth quarter of 2014, again reflecting the changing business mix.
The full year 2015 tax rate of 42.6 percent and fourth quarter tax rate of 43.3 percent increased year-over-year by 80 basis points and 110 basis points, respectively, due to higher levels of nondeductible ACA fees.
The company affirmed its 2016 financial outlook, including estimated revenues of more than $180 billion, rising net earnings growth to a range of $7.60 to $7.80 in adjusted earnings per share, and strong cash flows from operations in the range of $9.5 billion to $10 billion. ■