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UNH » Topics » Fourth Quarter and Full Year Highlights

This excerpt taken from the UNH 8-K filed Jan 18, 2007.

Fourth Quarter and Full Year Highlights

 

  •   Fourth quarter consolidated net earnings increased to $1.2 billion; full year net earnings increased to $4.174 billion. In the fourth quarter, there were 1.400 billion diluted weighted-average common shares outstanding. For the full year, there were 1.404 billion diluted weighted-average common shares outstanding.

 

  •   Cash flows from operations were approximately $1.6 billion in the fourth quarter and were approximately $6.5 billion for the year. Full year operating cash flows exceeded 150 percent of net income.

 

  •   Consolidated fourth quarter revenues exceeded $18.1 billion, increasing $5.8 billion or 47 percent year-over-year and $146 million or 1 percent sequentially. Revenues for full year 2006 increased $25.2 billion or 54 percent to $71.7 billion, with revenue advances in each of the Company’s business segments. Excluding revenue contributions from merger activity across the spectrum of UnitedHealth Group businesses, full year revenues grew at a 21 percent rate in 2006.

 

  •   Earnings from operations were $2 billion in the fourth quarter, and full year earnings from operations were approximately $7 billion in 2006.

 

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Fourth Quarter and Full Year Highlights – Continued

 

  •   Consolidated fourth quarter operating margin reached 11.0 percent. The full year reported operating margin of 9.7 percent reflected strong margin performance from historical UnitedHealth Group operating units, with overall margin moderated by business mix changes driven by the commencement of the Company’s Medicare Part D prescription drug plan offerings (Part D) and the acquisition of PacifiCare Health Systems (PacifiCare).

 

  •   Operating costs represented 15.0 percent of revenues in the fourth quarter, including incremental costs related to stock options matters as discussed in the text box on page one of this news release. The full year operating cost ratio of 14.7 percent also included costs related to stock option matters that were incremental to the Company’s original financial outlook for 2006, a portion of which will continue into 2007.

 

  •   The fourth quarter consolidated medical care ratio of 79.9 percent, which includes all risk-based businesses and products, declined 120 basis points on a sequential quarter basis, driven by the seasonally strong performance of Medicare Part D. The full year 2006 medical care ratio of 81.2 percent increased 120 basis points from 2005 results, and the fourth quarter 2006 medical care ratio increased 30 basis points year-over-year. These increases were largely due to the impact of the acquisition of PacifiCare in late December 2005 and the commencement of Medicare Part D on January 1, 2006.

 

  •   Medical costs payable, excluding the AARP supplemental insurance offerings of Ovations, increased $811 million or 13 percent year-over-year to $7.1 billion. Medical costs days payable were 53 days for the fourth quarter, excluding the AARP offerings and the effects of mid-quarter acquisitions; this was consistent with their levels of 53 days and 54 days in the second and third quarters of 2006, respectively.

 

  •   During the fourth quarter, the Company realized favorable development of $50 million in its estimates of medical costs incurred in 2005, bringing the full year total to $430 million. There was no current period effect from changes in the Company’s previous estimates of medical costs incurred in the first nine months of 2006.

 

  •   Accounts receivable, excluding the AARP offerings of Ovations, were $902 million at December 31, 2006 and represented 5 days sales outstanding.
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