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WSJ: UnitedHealth Net Rises 30% as Claims Costs Fall

JULY 20, 2010, 8:04 A.M. ET

By JODI XU

UnitedHealth Group Inc.'s second-quarter profit jumped 30% on better-than-expected revenue growth while claims costs fell.

As results topped estimates, the largest managed-care company in the U.S. by revenue also raised 2010 forecasts a second time, now projecting earnings of $3.40 to $3.60 a share on revenue of $93 billion, up 25 cents and $1 billion, respectively.

Health insurers have been hurt by falling enrollment, especially in their commercial segment amid high unemployment. UnitedHealth's commercial medical membership fell 1.7% to 24.6 million from a year earlier but increased 70,000 during the quarter. The total number of people served by UnitedHealth rose 8% from a year ago to 76.4 million on gains for risk-based products and Medicaid.

The sector is now facing new uncertainties from the federal overhaul, which might increase insurers' medical costs. However, it might add new members to health insurers like UnitedHealth, which has a chunk of services targeting the public sector.

The company reported a profit of $1.12 billion, or 99 cents a share, up from $859 million, or 73 cents a share, a year earlier. Revenue increased 7% to $23.26 billion.

Analysts polled by Thomson Reuters most recently estimated earnings of 75 cents and $22.97 billion in revenue.

UnitedHealth's medical-benefits ratio, or the amount of premiums used to pay patient medical costs, fell to 81.5% from 83.6%, largely due to prior-year reserves.

Write to Jodi Xu at [e-mail]

http://online.wsj.com/article/SB10001424052748703724104575378763838572170.html?mod=rss_whats_news_us_business