By Tomi Kilgore
UnitedHealth Group Inc. dispelled worries about its Medicare Advantage business, saying its tracking “very much in line” with expectations, after rival Humana Inc. had raised concerns by blaming an evolution in competition for its own Medicare growth problems.
UnitedHealth reported Wednesday fourth-quarter profit and revenue that rose above expectations, and affirmed its 2022 financial guidance.
UnitedHealth’s stock /zigman2/quotes/210453738/composite UNH +0.80% edged up 0.1% on Thursday to $463.00, after gaining 0.3% on Wednesday.
In the post-earnings conference call with analysts, Chief Financial Officer John Rex said the 2022 Medicare Advantage (MA) member growth outlook is “very positive” and “consistent” with objectives provided in November, with up to 800,000 new members expected to be served this year.
Analyst Scott Fidel at Stephens Inc. then asked, according to a FactSet transcript, if there has a been a “material change” in competition in the Medicare Advantage market heading toward 2022, and if UnitedHealth has witnessed any shifts in the distribution channels as trends in Medicare evolve.
His question follows recent comments made by Humana /zigman2/quotes/203095337/composite HUM +0.40% Chief Executive Bruce Broussard after the company slashed its outlook for 2022 net membership growth for individual MA products. At a Goldman Sachs Healthcare CEOs conference, Broussard said the lowered outlook was a retention issue, not a sales issue, which he blamed on competition and “changes and the evolution of the distribution structure within the industry.”
UnitedHealth Chief Executive Andrew Witty answered Stephens’ Fidel by saying, “the number of folks who have chosen UnitedHealthcare continues to grow super well, ahead of market, growing market share once again,” according to a FactSet transcript, and adding that the outlook was “super positive” and that nothing has changed in terms of distribution.
Tim Noel, CEO of UnitedHealthcare Medicare & Retirement, followed up by saying the MA market has been “highly competitive for a number of years,” and he doesn’t see and in that competitiveness in 2022.
“The trend of more entrants, better benefits has really been a multiyear one,” Noel said. “And we see this as being one that’s very good for seniors and also one that’s very good for the overall growth of the Medicare Advantage industry.”
“Seniors are shopping for more value as they should be,” Noel added. “And for out part, we’re really focused on differentiating our offerings in the marketplace.”
UnitedHealth shares have lost 5.5% since Humana warned about its MA problems , while Humana’s stock has tumbled 16.0%. Over the past three months, UnitedHealth shares have gained 4.7%, while the SPDR Health Care Select Sector exchange-traded fund /zigman2/quotes/205918244/composite XLV +0.98% has inched 0.3% lower and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.26% has slipped 2.5%.