UnitedHealth Group (UNH)

Closing Comment

“We have a positive outlook for further earnings growth this year. Our businesses are in an excellent position to sustain growth and performance, driven by the overall value that their services, technologies and products offer to customers in the end-markets they serve,” concluded Dr. McGuire. “Our quarterly results should benefit substantively in the second half of 2006 from the natural seasonality embedded in a number of our businesses, including Medicare Part D. We therefore expect to see accelerating earnings per share growth in the second half of this year. At the same time, we continue to build a foundation for future growth in 2007 and beyond, and expect baseline earnings per share to climb another 15 percent in 2007 above our increased 2006 outlook of $2.91 to $2.95 per share.”

Closing Comment

Dr. McGuire stated, “We are pleased to again report strong results, which reflect our continuing momentum in advancing health care solutions and services that work for participants in the broad health care marketplace. The success in these efforts allows us to increase our full year outlook for earnings growth to a range of 22 percent to 24 percent in 2006 over comparable 2005 results. We expect those earnings to be well supported by cash flows from operations in a range of $5.7 billion to $5.9 billion, an increase of $1.4 billion to $1.6 billion over the comparable 2005 result and well in excess of our estimated net income of approximately $4.1 billion.”

Closing Comment

Dr. McGuire concluded, “I am pleased to report both strong 2005 results and a very favorable 2006 outlook, supported by accelerating internal growth and expanding business opportunities. Our growth prospects across all of our business units directly reflect our ability to help the health care system work more effectively and, in turn, enhance the accessibility and affordability of services. Based on our strong position and business momentum entering 2006, we now anticipate a further increase in our earnings per share growth to a range of 21 percent to 23 percent over our 2005 results.”

UnitedHealth Group adopted the new accounting rules for stock compensation costs, effective January 2006. Including noncash stock compensation costs, the Company anticipates earnings of $2.85 to $2.90 per share in 2006, a significant increase over the $2.82 to $2.85 per share that the Company had previously projected for 2006. On a comparative accounting basis, the new 2006 outlook of $2.85 to $2.90 in earnings per share compares with earnings of $2.36 per share in 2005, including an adjustment to reflect 12 cents per share in noncash stock compensation costs in 2005. A restatement of historical financial results to reflect noncash stock compensation costs by business segment, by quarter, will be available in the Financial Reports and SEC Filings section of the Investor Information page on www.unitedhealthgroup.com.

Closing Comment

“Our efforts are directed at advancing quality, access, affordability and simplicity in health care systems – and doing so for a wide array of customers and markets,” stated Dr. McGuire. “We are pleased to see that pursuing better ways to organize health resources, apply technology and use data – all done through a diverse and responsible group of businesses – is producing positive results for all concerned parties.

“Our business outlook is favorable. The continued strategic and operating advances we are making, combined with strong organic growth now being realized as each of our businesses expands their market share, will drive positive performance into 2006. We now expect full year earnings of $2.48 per share in 2005, a 26 percent advance, and foresee further earnings per share growth in 2006 of 15 percent or more, prior to considering any per share contributions from the launch of our new prescription drug plans for seniors or the pending PacifiCare merger.”

Closing Comment

“Our organizational intensity around disciplined business execution coupled with a relentless focus on the long-term imperatives of affordability, access, quality and usability — applied broadly within the heath care system — are reflected in our second quarter results,” Dr. McGuire stated. “This combination of business execution and forward strategy to address the needs of our diverse client base is working well. We continue to build a foundation for sustained differentiated service and value to all participants in the health care markets.

“Based on our strong financial performance in the first half of this year, we now foresee earnings per share growth for full year 2005 of approximately 25 percent, with results projected in the range of $2.45 to $2.47 per share,” concluded Dr. McGuire. “We are positioned to generate earnings of approximately $0.63 per share in the third quarter, a sizeable advance, particularly given the increase in Medicare Part D launch costs that we will absorb in earnings in the second half of 2005. We expect to continue to drive substantive gains in 2006, with earnings per share up at least 15 percent, excluding any contributions from the recently announced merger with PacifiCare, which will further strengthen our ability to meet customer needs in key geographies and end-market segments.”

Closing Comment

“Our focus on the imperatives of affordability, access, quality and usability — applied broadly within the heath care system — has positioned us for sustained future performance,” Dr. McGuire stated. “We are confident that our on-going investments in technology, tools for data analysis, and the organization of health care resources, coupled with evolving partnerships with large employers, health plans and intermediaries will improve the value of services we deliver and help us expand our market share.

“Looking specifically to 2005 financial performance,” Dr. McGuire concluded, “our strong first quarter results and improving business momentum are cause for a strengthened forward outlook. We anticipate a year-over-year advance of more than $1.1 billion in full year 2005 earnings from operations, and now foresee growth in earnings per share of 23 percent to 24 percent in 2005, with earnings in the range of $4.85 to $4.90 per share.”

Closing Comment

“Results for 2004 were excellent, and we enter 2005 in an outstanding position. The growth performance of our businesses is accelerating, our customers are increasingly well served by capabilities facilitated by investments made over the past few years, and we have a new generation of initiatives under way,” said Dr. McGuire. “Given this momentum, our challenge remains the realization of the full potential embedded in our businesses, through more fully addressing the breadth of needs in the health care services market and those of the individual consumer.

“In that regard, we have made significant investments to directly address the strong demand expressed by employers and consumers for different solutions that enable affordable health care access,” Dr. McGuire continued. “Not including the more traditional account-based products like flexible spending vehicles, by the end of the first quarter of 2005 we expect to serve a total of 1.25 million people through the latest generation of offerings, including 880,000 using new consumer directed account-based health benefits products. Furthermore, new products will provide 3 million current customers with improved access for non-covered services. We expect a continuing expansion of these programs, and in the number of people they serve, during 2005 and 2006.”

The Company noted that its near term financial performance outlook has strengthened, even as it pursues these broader goals. Earnings per share for 2005 are now expected in the range of $4.75 to $4.80, an increase of 5 cents per share over the Company’s most recent view and representing a 21 percent to 22 percent earnings advance over the $3.94 per share earned in 2004.

Closing Comment

“Results for 2004 were excellent, and we enter 2005 in an outstanding position. The growth performance of our businesses is accelerating, our customers are increasingly well served by capabilities facilitated by investments made over the past few years, and we have a new generation of initiatives under way,” said Dr. McGuire. “Given this momentum, our challenge remains the realization of the full potential embedded in our businesses, through more fully addressing the breadth of needs in the health care services market and those of the individual consumer.

“In that regard, we have made significant investments to directly address the strong demand expressed by employers and consumers for different solutions that enable affordable health care access,” Dr. McGuire continued. “Not including the more traditional account-based products like flexible spending vehicles, by the end of the first quarter of 2005 we expect to serve a total of 1.25 million people through the latest generation of offerings, including 880,000 using new consumer directed account-based health benefits products. Furthermore, new products will provide 3 million current customers with improved access for non-covered services. We expect a continuing expansion of these programs, and in the number of people they serve, during 2005 and 2006.”

The Company noted that its near term financial performance outlook has strengthened, even as it pursues these broader goals. Earnings per share for 2005 are now expected in the range of $4.75 to $4.80, an increase of 5 cents per share over the Company’s most recent view and representing a 21 percent to 22 percent earnings advance over the $3.94 per share earned in 2004.