UPDATE: Dec. 1, 2020: This story has been updated to include comments and background from UnitedHealth Group's investor conference Tuesday.
- UnitedHealth Group expects revenue next year to be between $277 billion and $280 billion with an operating margin of between 8.1% and 8.5%, the company said early Tuesday to kick off its investor conference.
- Full-year 2020 revenue should come in at about $257 billion. That's despite unfavorable COVID-19 factors like treatment and testing costs, deferred care and the wider flagging economy as a result of the pandemic, which the company also baked into its 2021 outlook.
- The nation's largest commercial payer said it expects membership growth next year to be led by its Medicare Advantage business, which could increase by nearly 14%. Commercial enrollment is expected to rise by a range of 0.5% to 1.3%.
Private health insurers have seen massive profits this year as the COVID-19 pandemic forced providers and patients to defer more costly elective procedures. But the companies have warned that when routine care becomes more safe, patients could seek out care previously put off and put an abrupt end to the tailwind.
A vaccine would be key to that, and multiple drugmakers have said their candidates show at least 90% effectiveness. Moderna on Monday applied for an emergency use authorization for its vaccine, with new data showing the shot to be 94% effective.
But much remains to be seen about the timeline and administration for a potential vaccine, meaning uncertainty is still expected to reign next year.
UnitedHealth doesn't expect a vaccine to fully permeate the U.S. population until deep into 2021, CFO John Rex said Tuesday at the investor conference. The company expects direct COVID-19 testing and treatment costs next year to be about the same as in 2020, but with less of an offset from other care services being deferred. Additionally, the cost of delayed care this year among certain high-risk populations, especially seniors, could affect final risk scores and 2021 reimbursement levels, Rex said.
In an effort to ease investor worries about the volatility, UnitedHealth included a $1.80 per share hit from the pandemic into its guidance of adjusted earnings per share ranging from $17.75 to $18.25 for next year.
SVB Leerink analysts said in a Tuesday note the outlook is "likely no worse than feared" and the effects of COVID-19 that UnitedHealth is predicting could be conservative. Still, they expect a modest positive reaction to the guidance and "view the totality of the 2021 outlook favorably."
Jefferies analysts called the $18 earnings guidance midpoint for 2021 "a little soft" but noted they were encouraged by the expected growth in commercial enrollment.
Shares were trading up Tuesday morning as the investor conference continued.
UnitedHealth expanded its MA footprint for 2021, its biggest growth in five years with the addition of nearly 300 more counties. MA has been a strong growth driver for UnitedHealth, as it has been for many payers in recent years. The company predicts half of all Medicare beneficiaries will be enrolled in an MA plan by 2025.
UnitedHealth also sees strong growth potential in its commercial and Medicaid businesses, even as economic fluctuation could result in more people being booted off employer-sponsored insurance. Additionally, states are likely to resume Medicaid redeterminations that were suspended this year amid the pandemic, which could also shift the coverage landscape in 2021, Rex said.
But even amid employer attrition, UnitedHealthcare expects to see ongoing net membership growth in its commercial business, including double-digit growth in individual products next year. In 2020, its employer and individual business saw 15% member growth in individual benefits. And in Medicaid, the payer is forecasting it will add between 200,000 and 300,000 new beneficiaries in 2021.
"2020 has been anything but a shelter-in-place year for us," CEO Dave Wichmann said.
The company said it also expects a revenue increase for its fast-growing Optum arm that could flirt with $150 billion in 2021. That's slightly above consensus from SVB Leerink.
Rebecca Pifer contributed reporting.