This excerpt taken from the UNH 8-K filed Apr 22, 2008.
(For Immediate Release)
MINNEAPOLIS (April 22, 2008) UnitedHealth Group (NYSE: UNH) today reported its first quarter 2008 performance, including year-over-year gains in people served, revenues, and net earnings per share. First quarter results reflect strong growth advances in Enterprise Services businesses including financial services, and Medicaid programs, offset by higher than anticipated declines in risk-based commercial business, and reduced investment income, prior to accounting for realized capital gains in the Companys investment portfolio.
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UnitedHealth Group Continued
The Company reduced its full year 2008 outlook by 10 percent or $0.40 per share to a range of $3.55 to $3.60 per share. This reduction includes an anticipated $0.10 per share impact from unusually high influenza costs and reduced investment income, net of capital gains, and adjustments reducing anticipated rates of revenue growth and margin assumptions for risk-based Commercial Markets products where membership levels have declined in response to strengthened premium yield increases in 2008 and certain senior products, where the timing of membership gains and the product mix have changed. Management estimates the full year UnitedHealth Group medical care ratio to be in a range centered around 81.3 percent, plus or minus 50 basis points, compared to 80.6 percent in 2007. While the Company is attentive to the risk of future medical cost increases, management believes the commercial medical cost trend is consistent with its previously projected range.
Stephen J. Hemsley, president and chief executive officer of UnitedHealth Group, said, These financial results are not acceptable for a company with our capabilities and potential. They are due in part to broader economic challenges and in part to our own performance. We are adjusting our approaches, in particular to strengthen organic growth and address operating costs, to deliver financial performance that more appropriately represents the capacity and potential of our organization. We remain focused on our long-term strategy of building an integrated health services system supporting a spectrum of innovative market-facing businesses, and we believe that the creation and operation of that enterprise will build exceptional value for its customers, business partners and shareholders. Our first quarter results and new outlook include some of the successes we are seeing as we pursue that goal.
A number of highlights are evident in the revised growth outlook, including strong growth for AmeriChoice and Ingenix and strong operating performance from Prescription Solutions, including increased mail service fulfillment and generic drug utilization. Ovations Special Needs Plans are expanding more strongly than expected, which the Company believes will be positive for the future. In Commercial Markets, the Companys leading position in consumer-driven benefit products continues to strengthen, with exceptional growth achieved in first quarter 2008. Consumer participation in fee-based benefits in the Commercial Markets Group was also stronger than expected, with more people electing UnitedHealth Group benefits at large employers offering multiple benefit providers. Management believes that the Companys improved service levels, broad and stable network and overall clinical value proposition were key factors to the stronger consumer participation.
The Company remains committed to substantive share repurchase over the course of 2008, with a total of $4 billion in repurchase activity planned for the full year.
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Given the diversity and changing mix of the business and seasonality considerations, management believes comparisons between first quarter 2008 and fourth quarter 2007 results are less meaningful than year-over-year quarterly comparisons. Sequential quarterly comparisons are affected by the seasonality of revenues, key income statement ratios, and earnings from operations in important business lines such as Part D drug programs, high deductible insurance products and health informatics offerings.