(updates premarket quote, adds unit information in paragraphs 10-14)
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.
Shares of UnitedHealth (NYSE:UNH) fell to $51.90 in the premarket after closing Friday at $54.40.
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.
Profits in UnitedHealth's (NYSE:UNH) largest division, Health Care Services, fell $50 million, or 3%, to $1.6 billion, even as revenue rose 2% to $17.57 billion. UnitedHealth (NYSE:UNH) said the decrease was due to a seasonal rise in health-care spending at UnitedHealthcare, and higher costs for new market launches, advertising and enrollment costs in its Ovations unit for seniors.
Membership in Ovations Medicare supplement programs grew by 30,000 seniors, or 1%, in the fourth quarter, while participation in Medicare Advantage offerings was flat in the quarter.
Enrollment in UnitedHealthcare and Uniprise, its divisions for employer health coverage, declined by 50,000 people for the fourth quarter. For the full year, enrollment in those programs dropped by 175,000 people, or 0.7%, as the company tries to integrate its PacifiCare acquisition. UnitedHealth (NYSE:UNH) said its " repositioning" of PacifiCare would continue through the first half of 2008.
AmeriChoice (NYSE:UNH) fourth-quarter revenue of $1.2 billion rose $227 million, or 24% year-over-year, and $35 million, or 3%, from the third quarter of 2007.
UnitedHealth (NYSE:UNH) said fourth-quarter revenue increased 24% to $1.2 billion in its AmeriChoice (NYSE:UNH) division for managing Medicaid plans.
