UnitedHealth Group Inc. (NYSE:UNH) is making projections for 2014 earnings and revenue growth that fall well short of Wall Street’s expectations.
The Minnetonka, Minn., company released its initial 2014 forecast on Monday, a day ahead of the start of its annual investor conference in New York City.
The company said it expects earnings of $5.40 to $5.60 per share on $128 billion to $129 billion in revenue. That widely misses analysts’ average estimate of $5.67 per share on revenue of $132.2 billion, according to FactSet.
Funding cuts to Medicare Advantage coverage have fueled UnitedHealth’s relatively conservative expectations for this year and next. UnitedHealth is the nation’s largest provider of Medicare Advantage plans, which offer government-subsidized coverage for elderly and disabled people. The insurer has nearly 2.9 million people enrolled in the plans.
Those plans took a hit earlier this year when federal budget cuts took away money after insurers had set rates for the year. UnitedHealth, which has a reputation for providing conservative annual forecasts, told analysts in October that the cuts will wind up shaving about 15 cents per share off earnings for 2013.
Medicare Advantage plans also face more cuts next year to help fund the federal health care overhaul, which aims to provide insurance coverage for millions of uninsured people. UnitedHealth executives have been warning for several quarters about pressure the cuts are placing on the insurer’s business.