UnitedHealth Earned 68 Cents a Share

This was a good quarter for UnitedHealth (UNH):

U.S. health insurer UnitedHealth Group Inc. on Tuesday posted higher-than-expected quarterly profit as it benefited from the acquisition of PacifiCare Health Systems, and boosted its full-year profit forecast.
Shares of UnitedHealth rose 3 percent before the market opened.
The $9.2 billion PacifiCare purchase, completed in December, helped fuel a 58 percent surge in revenue in the first quarter to $17.59 billion. The company said it now provides services to about 70 million U.S. health consumers, an increase of 27 percent over the prior year.
The largest U.S. health insurer by market value said net income rose to $899 million, or 63 cents per share, from $743 million, or 55 cents, a year earlier. Last year’s results were restated to account for new stock option expensing rules.
UnitedHealth posted adjusted earnings of 68 cents per share, which were changed for costs under the new Medicare Part D drug plans. Premiums rose 60 percent to $16.21 billion.
The adjusted results were 3 cents ahead of analysts’ average projections of 65 cents, according to Reuters Estimates.
UnitedHealth said first-quarter results compared with its previous forecast for net earnings of 58 cents per share and adjusted earnings of 65 cents.
The insurer increased its full-year forecast for net earnings to a range of $2.88 per share to $2.92 per share, or growth of 22 percent to 24 percent. In January, UnitedHealth forecast 2006 earnings per share of between $2.85 to $2.90.
Shares of the Minneapolis-based company closed at $51.67 on Monday. The stock has fallen about 17 percent so far this year, compared to about a 2 percent dip in the Morgan Stanley Healthcare Payor index (^HMO).

The WSJ has more:

UnitedHealth Group Inc. Chairman and Chief Executive William W. McGuire said Tuesday he is recommending that the insurer, which is under scrutiny for the timing of past stock-options awards, forgo equity-based payments and grants for most senior executives.
The company also said it posted higher-than-expected first-quarter earnings but lowered its guidance for next year. Earnings at the country’s second-biggest health insurer climbed 21% to $899 million, or 63 cents a share, in the quarter, from $743 million, or 55 cents per share, a year earlier. UnitedHealth’s acquisition of PacifiCare Health Systems Inc., which it completed late last year, and its new Medicare drug-benefit plans helped fuel profits, as a well as a 58% jump in first-quarter revenues to $17.59 billion.
As a result, Dr. McGuire said the company now expects full-year earnings between $2.88 and $2.92 a share — a 22% to 24% increase from 2005 — compared with its earlier projection of between $2.85 to $2.90 a share.
Dr. McGuire prefaced his discussion of the company’s performance with his first comments on the controversy over his massive financial windfall from stock options, now totaling $1.6 billion in unrealized gains. In a move that could prove to be a significant pullback from what has been an enormously generous remuneration package, Dr. McGuire said he was recommending that the company eliminate change-in-control severance payments and “noncash perquisites,” for the most senior executives, as well as capping supplemental retirement plans and eliminating further equity-based grants “for the foreseeable future.” UnitedHealth’s board will consider that idea at its next meeting in May, he said.
Dr. McGuire’s suggestion does not restrict him or other executives from exercising options they’ve already received, and a company spokesman declined to specify what perks Dr. McGuire suggested be eliminated.
Earlier this month, UnitedHealth said a committee of its independent directors would review the company’s options-grant practices in light of Securities and Exchange Commission scrutiny of options grants at numerous companies, including UnitedHealth.
The Wall Street Journal reported last month that Dr. McGuire’s options grants were regularly dated just before substantial run-ups in share price and after a sharp fall.

Posted by on April 18th, 2006 at 9:21 am


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