NEW YORK (Dow Jones) -- UnitedHealth Group Inc. (NYSE:UNH) reported Thursday a 15% increase in third-quarter earnings, helped by strength in its Medicaid, Medicare and senior programs.
UnitedHealth (NYSE:UNH) (UNH) said net income rose to $1.28 billion, or 95 cents a share, from $1.11 billion, or 80 cents, earned in the year-earlier third quarter. Total revenue generated by the Minnetonka, Minn.-based company rose 4% to $18.68 billion.
Analysts, on average, had expected the health insurer to report earnings of 92 cents a share on revenue of about $19 billion, according to estimates compiled by Thomson Financial.
"Our diversified health-care service enterprise continued to perform well, with strong results from businesses such as AmeriChoice (NYSE:UNH) in Medicaid, Evercare in specialized senior programs, SecureHorizons in Medicare Advantage, Golden Rule in individual insurance and Ingenix in health informatics," said Stephen Hemsley, UnitedHealth's (NYSE:UNH) president and chief executive.
In a statement, he also said the company was set for a "strong" fourth quarter launch of AARP-branded Medicare products for 2008.
The nation's largest health insurer managed to push its medical care ratio, which measures the percentage of premiums spent on medical costs, to 79.5%, just under the 80% threshold. UnitedHealth's (NYSE:UNH) medical loss ratio was 80.5% in the second quarter, down 1.1 percentage points from the year before and down 2.2 percentage points from the prior quarter.
In its last earnings report, however, UnitedHealth (NYSE:UNH) had projected its medical loss ratio would climb from 81.5% for the first six months of the year, to a range of 81.5% to 82% even as it raised its earnings outlook at the time.
The ratio for UnitedHealthcare was 81.6%, compared to a ratio of 82% in the second quarter.
For the year, UnitedHealth (NYSE:UNH) is targeting earnings of about $3.49 to $3.50 share for full year 2007. Fourth-quarter earnings per share are expected to be slightly below the third quarter's profit, due to projected seasonal increases in health-care costs for UnitedHealthcare and seasonally increased levels of Medicare Advantage sales and marketing expenditures.
The company expects 2008 earnings in the range of $3.95 to $4.00 a share, including contributions from Sierra Health Services Inc. (NYSE:SIE) (SIE) , which is anticipated to be acquired prior to the end of 2007, and a total of $7 billion in share-repurchase projected through fourth quarter 2007 and full year 2008.
Analysts' average profit forecasts, according to Thomson Financial, stand at 94 cents a share for the fourth quarter, $3.48 a share for the year and $3.95 for 2008.
Shares of UnitedHealth (NYSE:UNH) closed Wednesday at $48.60, up 10 cents.
(END) Dow Jones Newswires 10-18-07 0913 Copyright (c) 2007 Dow Jones & Company, Inc.
