UnitedHealth Group (NYSE: UNH) reported Q4 EPS of $1.55, $0.05 better than the analyst estimate of $1.50. Revenue for the quarter came in at $33.4 billion versus the consensus estimate of $33.11 billion.

Performance Highlights:

• The 2014 consolidated medical care ratio decreased 60 basis points year-over-year to 80.9 percent, reflecting the premium impact of ACA fees, partially offset by an increased mix of public and senior sector business. The fourth quarter medical care ratio of 79.8 percent decreased 140 basis points year-over-year, due to the impact of ACA fees and improved premium yields, partially offset by business mix.
• Favorable reserve development was $100 million in the fourth quarter, including $40 million related to the prior year’s medical services, compared to a total of $170 million for the fourth quarter of 2013, including $100 million related to the previous year’s services. Overall medical cost trends remained well controlled, with decreased inpatient hospital usage per person in 2014.
• Meaningful improvements in productivity and operating efficiency in 2014 were more than offset by 120 basis points of ACA fees and taxes and the growing mix of health care services business, as the operating cost ratio increased 80 basis points to 16.6 percent. The seasonally higher fourth quarter operating cost ratio of 17.5 percent increased 130 basis points year-over-year due to ACA costs and health care services business growth.
• The full year 2014 tax rate of 41.8 percent increased 540 basis points year-over-year due to ACA taxes.

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