UnitedHealth Cautions

UnitedHealth‘s (UNH) stock got creamed this week after WellCare (WCG) and Humana (HUM) lowered their guidance. Naturally, people have been expecting an earnings warning from UNH bot the company has so far stuck to its 2008 forecast of $3.95 to $4 a share.
Finally today, UNH didn’t warn, but it did caution:

UnitedHealth Group management is continuing to actively monitor a variety of trends affecting the sector. Factors the Company is assessing include:
* Membership trends in risk-based commercial markets and Medicare Advantage product offerings, including Special Needs Plans which serve higher acuity seniors;
* Benefit buy-downs and continued local pricing dynamics in commercial markets;
* U.S. Government data showing influenza and influenza-like illness running at high levels across all populations through the first two months of 2008;
* Medicare Part D plan performance; and,
* The impact of the Federal Reserve decision to reduce interest rates in the first quarter of 2008.
Based on data from the first two months of 2008, the Company’s estimates of medical costs incurred in 2007 appear to have been accurate. Through the first two months of 2008, the commercial medical cost trend has performed consistent with the Company’s expectations, with the exception of a higher than expected impact from influenza. The Company also noted that the net unrealized capital gain position in its investment portfolio has continued to strengthen in 2008. The Company’s Enhanced Medicare Part D program performance is consistent with the Company’s plan for the approximately 100,000 participants in these offerings at UnitedHealth Group.
As evidenced by recent market commentary, there may be pressure on first quarter and full year 2008 results. However, given that it is still early in the year, management believes it is premature to draw adverse conclusions.

Posted by on March 13th, 2008 at 9:53 am


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