UnitedHealth Reports Third-Quarter Earnings, Strong Results In Medicare, Medicaid Businesses

Main Category: Medicare / Medicaid / SCHIP
Article Date: 22 Oct 2007 - 5:00 PDT

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UnitedHealth Group on Thursday reported that third-quarter net income increased by 15% to $1.28 billion, or 95 cents per share, from $1.11 billion, or 80 cents per share, in the same quarter last year, the AP/Long Island Newsday reports. Revenue for the quarter increased by about 4% to $18.68 billion from $17.97 billion a year earlier (Freed, AP/Long Island Newsday, 10/18).

UnitedHealth's medical care loss ratio, which is the percentage of premium revenue it spends on patient care, declined by 1.6 percentage points to 79.5% in the quarter, according to the Wall Street Journal (Shwiff/Kingsbury, Wall Street Journal, 10/18). The reduction shows health care cost containment, which "may reassure investors who were rattled by an unexpectedly high medical-cost ratio in the commercial business in the first half," the Journal reports (Wisenberg Brin, Wall Street Journal, 10/19).

Total membership peaked at about 71 million with an increase of about 605,000 from a year earlier, according to the Journal (Wall Street Journal, 10/18). Membership in fee-based products increased by 80,000 people in the quarter, but overall membership declined with a lower risk-based membership of 140,000 people, according to the AP/Newsday. UnitedHealth showed "strong results" in its AmeriChoice Medicaid program and its SecureHorizons Medicare Advantage plan, AP/Newsday reports. Revenue for Health Care Services, which includes AmeriChoice, increased by 4% to $16.7 billion, but the segment was affected by slow growth in United Healthcare, which is "one of UnitedHealth's most important segments," according to the AP/Newsday (AP/Long Island Newsday, 10/18).

Fourth-quarter results are expected to be lower than the third quarter because of marketing for MA plans, which are co-branded with AARP, according to the Minneapolis Star Tribune. UnitedHealth also in the fourth quarter and into 2008 plans to buy back about $7 billion of its own shares.

Hemsley Comments
CEO Stephen Hemsley touted addressing some issues the company was experiencing. He said that integration problems with PacifiCare, which the company bought last year, have been fixed and that claims and other financial dealings were accurate for more than 99% of cases this year. "This quarter, we have done what we told you we would do," Hemsley said, adding, "Our prediction for 2008 is a return to balanced growth."

He also mentioned the temporary suspension of MA plan marketing and enrollment among insurers this year. He said, "We enter 2008 with Medicare Advantage much better positioned for growth than last year," adding, "Certified brokers are better trained and (the company has) better direct oversight of their day-to-day efforts" (Yee, Minneapolis Star Tribune, 10/18). According to Hemsley, "accelerating Medicare Advantage business" is one of the "key financial elements for 2008" (Wisenberg Brin, Dow Jones, 10/18).

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