(Reuters) - UnitedHealth Group Inc, the largest U.S. health insurer, on Thursday reported a higher fourth-quarter profit and the addition of 170,000 members, and said 2014 earnings would improve as well.
The fourth quarter marked the beginning of sales of new individual plans created under the national healthcare reform law often called Obamacare, coverage which went into effect for the first customers on January 1.
UnitedHealth has limited its participation in selling those new plans so far to three states but said in the release that “strength in sales to individuals and smaller employer groups” had contributed to adding new customers in the quarter.
Net income rose to $1.4 billion, or $1.41 per share, from $1.2 billion, or $1.20 per share, a year earlier.
The insurer is the first to report its results in a group that also includes WellPoint Inc and Aetna Inc. Employer-based plans and government health programs, as well as a fast-growing health technology division, make up the bulk of UnitedHealth’s annual sales.
UnitedHealth also added new members in its government plans for seniors and for the poor, for a total of 45,445,000 medical customers at the end of 2013.
The company said that revenue rose to $31.12 billion, up from $28.77 billion a year earlier.
Both earnings and revenue came in slightly ahead of analyst expectations, which were for earnings of $1.40 per and revenue of $31.07 billion, according to ThomsonReuters I/B/E/S.
United Health said it continues to expect revenue of $128 billion to $129 billion and earnings of $5.40 to $5.60 per share in 2014.
The company’s private Medicare business, which provides managed care plans to seniors, experienced government funding cuts that decreased its profitability, UnitedHealth said.
It was helped, however, by an overall lower medical spending trend as fewer customers checked into hospital, reducing expenditure on reimbursing providers.
UnitedHealth said that profit improved in its technology business, which includes the QSSI unit that has been working on fixing problems with the federal website for new health insurance for individuals called HealthCare.gov. Optum, which includes many other health technology related businesses, had earnings from operations of $2.3 billion, up from $875 million a year earlier.
Reporting by Caroline Humer; Editing by Rosalind Russell