INDIANAPOLIS -- UnitedHealth's fourth-quarter earnings slid 16 percent from last year, when a federal tax overhaul helped the nation's largest health insurer, but the performance still came in well above analyst expectations.
The company's fast-growing Optum segment helped stoke results, with operating earnings for that business jumping nearly 23 percent to $2.7 billion. Optum runs a large pharmacy benefit management business and a growing number of clinics and urgent care and surgery centers.
UnitedHealth's insurance side, which generates more revenue but thinner profits, had flat operating earnings of $1.8 billion. Medical expenses, by far the company's biggest operating cost, jumped 11 percent to nearly $37 billion in the quarter.
UnitedHealth has been feeding Optum with acquisitions as insurers and other health care entities push deeper into managing or providing patient care in order to cut costs and improve quality. That's a big shift that involves trying to keep people healthy instead of waiting to pay claims after they seek care. More than a year ago, the company announced a $5 billion deal to buy DaVita Medical Group and its hundreds of clinics.
Optum contributed 47 percent of UnitedHealth's full-year operating earnings last year, up from about 25 percent five years ago, company leaders said on a Tuesday morning conference call to discuss results.
Overall, UnitedHealth Group Inc. earned $3.04 billion in the quarter that ended Dec. 31, with adjusted earnings of $3.28 per share. That was 8 cents better than industry analysts expected, according to a survey by Zacks Investment Research.
Total revenue of $58.42 billion also topped Street expectations.
For the full year, UnitedHealth earned nearly $12 billion on $226 billion in revenue. Total enrollment jumped 5 percent in 2018 to 49 million people, including an international business of more than 6 million.
In 2019, UnitedHealth expects adjusted earnings of between $14.40 and $14.70 per share, a forecast it first laid out in late November and then reaffirmed Tuesday.
Analysts expect $14.62 per share, according to FactSet.
UnitedHealth Group, a component of the Dow Jones industrial average, is the first health insurer to release results every quarter. Many analysts and investors see it as a bellwether for the sector.
Shares of the Minnetonka, Minnesota, company rose a little more than 1 percent to $251.49 Tuesday morning, a bigger advance than broader indexes.
UnitedHealth shares also gained 13 percent last year while the Dow fell.
Follow Tom Murphy on Twitter: @thpmurphy
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNH at https://www.zacks.com/ap/UNH