Tomahawk, WI 04/21/2014 (Basicsmedia) – As health insurance companies start reporting their results after the new enrolments under the Affordable Care Act have begun, investors are eager to see the effects of Obamacare on the bottom-line. For UnitedHealth Group Inc. (NYSE:UNH), 1Q2014 profits came in at $1.1 billion, down by 7.8% ($1.19 billion) compared to 1Q2013.

Results And Projections

With the government planning to reduce funding for Medicare Advantage plans, UnitedHealth is expected to take some hits. Revenues for the company’s insurance arm — UnitedHealthcare — increased by 3.6% to $29.25 billion. Revenues for UnitedHealth Group Inc. (NYSE:UNH) as a whole grew by nearly $1.4 billion (4.5%) to reach $31.7 billion in 1Q2014. The number of people who got coverage through UnitedHealthcare also increased to 44.7 million from 45.4 million at the end of 2013. It expects to enroll more than 350,000 to 450,000 additional people this year in its Medicaid contracts. The Congressional Budget Office forecasts 12 million will obtain Medicaid coverage by end 2016. The revenues for Optum — its health-services business — grew by 29% to reach $11.2 billion.

Its Medicare enrollees increased by360,000 across all the Medicare product categories with strong Part D sales. The company expects the 2Q2014 earnings per share to be more than the 1Q2014 EPS but less than 2Q2013 EPS. The company hopes to target the more than 700 of the Fortune 1,000 companies that it does not reach right now. Similarly, it hopes to tap the 230 million Americans who are not its customers at present.

Crystal Ball Gazing

This is a time of uncertainty for health-insurance providers such as UnitedHealth and its competitors Aetna Inc (NYSE:AET), WellPoint Inc (NYSE:WLP) and Humana Inc (NYSE:HUM). As the individual mandate is rolled out, will enough new health-insurance customers help offset the negative impact from the mandated acceptance of patients with pre-existing conditions?

On the Medicare Advantage front, UnitedHealth is less exposed compared to Humana. For UnitedHealth Group Inc. (NYSE:UNH), growth is welcome in all its divisions — whether from its Optum healthcare-services division or its pharmacy benefit management business.

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