DOW JONES NEWSWIRES
UnitedHealth Group Inc. (NYSE:UNH) (UNH) reported a 3.5% rise in fourth-quarter net income, as the health-insurance giant benefited from strong growth in its prescription-solutions unit.
Minnetonka, Minn.-based UnitedHealth (NYSE:UNH) posted net income of $1.22 billion, or 92 cents a share, up from $1.18 billion, or 84 cents a share, a year earlier. Prior-year results included about $50 million in stock-option related expenses, including a $13 million charge related to historical stock options.
Revenue rose 3.2% to $18.71 billion.
The mean estimates of analysts polled by Thomson Financial were for earnings of 92 cents a share on $18.79 billion in revenue.
The company's membership rose 270,000 to 70.95 million.
UnitedHealth's (NYSE:UNH) medical-loss ratio, the percentage of premium revenue used to pay patient bills, was 79.9%, flat with the year-earlier quarter.
Operating margin was 10.9%, flat with the year-earlier period.
In the company's health-care services segment, revenue rose 2.6%, while operating earnings climbed 3% amid a 9.1% operating margin, compared with a 9.6% operating margin a year earlier.
The company's other segments also saw increases in revenue and operating earnings. The prescription-solutions unit saw its revenue more than triple, as earnings from operations nearly doubled, though operating margin was 2.4%, compared with 3.9%.
UnitedHealth (NYSE:UNH) reiterated its prior guidance for 2008, despite the fact the company has not yet acquired Sierra Health Services Inc. (NYSE:SIE) (SIE). UnitedHealth's (NYSE:UNH) prior forecast for 2008 earnings of $3.95 to $4 a share on revenue of about $83 billion assumed its pending acquisition of Sierra Health closed prior to the end of 2007.
Analysts' current mean estimates were for 2008 earnings of $3.96 a share on $ 79.8 billion in revenue.
The company also said it expects first-quarter earnings to be in the range of 82 cents to 84 cents a share. Analysts' mean estimates were for earnings of 83 cents a share.
With the Sierra Health deal still expected, UnitedHealth (NYSE:UNH) has been on a recent buying spree. Two weeks ago, it completed its acquisition of Fiserv Inc.'s (NASDAQ-NMS:FISV) ( FISV) health-related businesses and announced an agreement to acquire (UNHC) Unison Health Plans.
In December, the company said it would recover more than $887.9 million in value from some former executives amid stock-option backdating litigation in one of the largest executive-pay givebacks in history.
The largest portion of the financial recovery came from former UnitedHealth Chief Executive William McGuire, who was ousted in November 2006. He agreed to forfeit about $620 million in stock-option gains and retirement pay to settle the claims. A week later, his remaining stock options - valued at about $800 million - were frozen for more than a year while the lawsuits continue to play out in court.
UnitedHealth (NYSE:UNH) has spent the last few years trying to improve governance and win back shareholder trust in the wake of the stock-options backdating scandal. In 2006, it created a committee that allows shareholders to have input on director selection and said it would add at least five independent directors over the next three years. So far, two have been added, with a third addition expected by May.
In the quarter, UnitedHealth Group (NYSE:UNH) repurchased 40 million shares for $2.2 billion.
Shares of UnitedHealth (NYSE:UNH) closed Friday at $54.40. There was no premarket activity.
-Donna Kardos, Dow Jones Newswires; 201-938-5963; donna.kardos@dowjones.com
(END) Dow Jones Newswires 01-22-08 0701 Copyright (c) 2008 Dow Jones & Company, Inc.
