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UnitedHealth fourth-quarter revenue rises as costs kept in check

By Caroline Humer

(Reuters) - UnitedHealth Group Inc , the largest U.S. health insurer, said on Thursday it kept fourth-quarter costs under control and increased revenue by more than 11 percent, helping earnings per share to rise.

The company, which provides health care benefits through both employer and government-paid insurance plans and serves individuals and military members, also backed its forecast for 2013 revenue growth of at least 11 percent and said earnings would be in a range of slightly down to up 4 percent.

UnitedHealth's business has benefited in recent years as consumers cut back on medical services because of the weak economy, but the company also has had to adapt to new rules for insurers associated with the 2010 Patient Prevention and Affordable Care Act.

"There wasn't a whole lot of surprises in there. They came in line with consensus on earnings," said Jason Gurda, an analyst at Leerink Swann. Operating costs were higher, he said.

UnitedHealth said that while fourth-quarter commercial medical costs rose, they were a bit lower than it expected. Its medical loss ratio, or the percentage of premiums paid for medical expenses, was 80.5 percent.

The Affordable Care Act in 2011 began requiring companies to spend at least 80 percent or 85 percent of premiums on medical care or provide a rebate to customers.

UnitedHealth, which bought 65 percent of Brazil's Amil Participacoes for $3.5 billion during the quarter, plans to increase its stake by 25 percent through buying shares from the public during the first half of 2013. The affiliate helped push international revenues to $1 billion in the fourth quarter, the company said.

Optum, its growing health technology division, had revenue of $7.5 billion during the quarter and added $459 million to operating earnings.

FINISHES 2012 WITH 83.7 MLN CUSTOMERS

Fourth-quarter profit rose to $1.20 from $1.17 per share a year earlier, as outstanding shares fell. Net earnings were down 1 percent to $1.24 billion from $1.25 billion a year earlier.

Revenue rose to $28.8 billion from $25.9 billion.

Analysts expected fourth-quarter earnings of $1.19 per share and sales of $28.2 billion.

For 2013, UnitedHealth forecast revenue of $123 billion to $124 billion, up from $110.6 billion in 2012. It sees earnings per share rising to a range of $5.25 to $5.50, from $5.28 in 2012.

Analysts were expecting $5.55 per share on revenue of $121.11 billion, according to Thomson Reuters I/B/E/S.

The company finished 2012 with 6 percent growth in membership to 83.7 million customers, it said.

In November, the company said it expected to add 3.5 million to 4 million new members in 2013, slower growth compared with 2012.

But the market for insurance is expected to increase as the Affordable Care Act adds 30 million more insured people through individual insurance and an expansion of its Medicaid program for the poor.

By the fall of this year, state and federal health marketplaces will offer insurance plans for 2014 that are sold by private companies like UnitedHealth.

(Reporting by Caroline Humer; Editing by Alden Bentley, Gerald E. McCormick and Jeffrey Benkoe)

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