Investors Watch UnitedHealth for Cost Trends, Law Impact -- Earnings Preview

   By Anna Wilde Mathews 
 

UnitedHealth Group Inc. is scheduled to announce its fourth-quarter earnings before the market opens Wednesday. Here's what you need to know:

--EARNINGS FORECAST: Net income of $1.50 a share for the fourth quarter is the consensus of analysts surveyed by Thomson Reuters, compared with $1.41 a share reported a year earlier. The company said in December that it expects per-share earnings for 2014 to be in the range of $5.60 to $5.65.

--REVENUE FORECAST: Revenue of $33.11 billion for the fourth quarter is projected by analysts, compared with $31.12 billion a year earlier.

WHAT TO WATCH:

--HEALTH-CARE COSTS: Health spending has been rising at a relatively limited pace, a boon to insurers. But managed-care investors are watching closely for signs of an uptick -- and hospital companies' recent reports of increasing patient volumes have fueled their worries. As the biggest insurer and the first to report, UnitedHealth is seen as a bellwether, and its views on spending trends are closely monitored.

--FLU: One specific area of concern for analysts likely will stem from signs that this year's flu season may be somewhat more severe. That could cause unexpected expenses for insurers. Another line of questioning likely will be around specialty drugs, particularly the hepatitis C medications. Insurers and pharmacy-benefit managers have been striking deals with manufacturers to favor particular medicines for the liver disease.

--HEALTH LAW: UnitedHealth's insurance arm is selling plans in 23 states' health-law marketplaces in 2015. Listen for its take on enrollment, including any signal about demographics such as age. The company will likely also get asked about its plans and risks should the Supreme Court strike down many of the health law's federal subsidies, a decision that would create huge challenges for insurers offering plans under the Affordable Care Act.

Write to Anna Wilde Mathews at [e-mail]

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