(Reuters) - UnitedHealth Group Inc said on Thursday that its third-quarter profit rose about 1 percent as the enrollment of an additional 275,000 people in its health insurance plans offset higher operating costs in its private Medicare business.
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Earnings were in line with analysts' expectations, but revenue fell short.
The company, the largest U.S. health insurer, reported earnings of $1.57 billion, or $1.53 per share, up from $1.56 billion, or $1.50 per share, a year earlier.
UnitedHealth said revenue increased 12 percent to $30.6 billion, slightly below analysts' estimates of $30.8 billion, according to Thomson Reuters I/B/E/S.
CRT Capital analyst Sheryl Skolnick said in a research note that investors generally expect UnitedHealth to beat Wall Street estimates.
Shares of UnitedHealth fell 2.9 percent to $73 in trading before the market opened. At Wednesday's close, they had gained about 38 percent this year.
The stock performance in coming weeks will probably be determined by the tone of an investor call later Thursday, Skolnick wrote.
UnitedHealth and other U.S. insurers are facing big changes due to government healthcare reform, including the start of new healthcare exchanges for individuals and small businesses. The company is only participating in a limited number of those markets.
UnitedHealth's employee-based business is also changing, as corporations have started shifting how they provide healthcare benefits. They are increasing their workers' medical deductibles and some are experimenting with sending them to private healthcare exchanges to buy their plans.
UnitedHealth, the first of the insurers to report its third-quarter results, said it spent 80.6 percent of its healthcare premiums on medical claims, a rise of 160 basis points from a year earlier, due to government cuts to payments for Medicare Advantage services.
The company also spent more because it had a larger percentage of revenue from government-paid plans, which carry lower profit margins.
"Unprecedented levels" of growth in the fee-based business of administering benefits for corporations and international growth of the benefits administration business contributed to higher operating costs, it said.
UnitedHealth said it had 45.3 million people enrolled in health plans as of September 30, helped by increases in individuals in government-paid programs such as Medicaid for the poor and Medicare Advantage for older people. Its international large-group business also expanded.
UnitedHealth said 5.7 million consumers, or nearly 20 percent of the total members in employer-sponsored or individual plans, were in high-deductible plans as of September 30.
UnitedHealth raised the low end of its 2013 earnings outlook to $5.40 a share from $5.35 while keeping the high end at $5.50. Analysts are expecting $5.51 per share.
The company forecast full-year revenue of $122 billion, compared with analysts' estimates of $122.7 billion.
(Reporting by Caroline Humer; Editing by Jane Merriman and Lisa Von Ahn)
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