Send us Feedback

UnitedHealth Group (UNH)
Analysis
SUMMARY
BULLS
BEARS
TOPICS
Data
DATA CENTRAL
STOCK CHART
Financials
SEC FILINGS
BALANCE
INCOME
CASH FLOW

UNH » Topics » UNITEDHEALTH GROUP REVISES 2008 FINANCIAL OUTLOOK

This excerpt taken from the UNH 8-K filed Jul 2, 2008.

UNITEDHEALTH GROUP REVISES 2008 FINANCIAL OUTLOOK

 

 

•

  

Second Quarter 2008 Adjusted Earnings Estimated in the Range of $0.64 to $0.66 Per Share1

 

 

•

  

Forecasts Full Year 2008 Adjusted Net Earnings in the Range of $2.95 to $3.05 Per Share1

MINNEAPOLIS (July 2, 2008) – UnitedHealth Group (NYSE: UNH) announced today a revision in its outlook for 2008, following an assessment of preliminary second quarter 2008 results and recent business trends. The Company now expects full year 2008 adjusted earnings per share in the range of $2.95 to $3.051 on revenues in the $81 billion range, with adjusted earnings from operations of approximately $6.5 billion1 and cash flows from operations approaching $5 billion1, prior to consideration of cash payments for litigation settlements, for which the timing for a portion of the payment is uncertain. UnitedHealth Group had previously projected $3.55 to $3.60 per share in earnings, with cash flows from operations of $5.7 billion to $6.0 billion. The Company will provide a full report on its results and outlook at the time of its second quarter 2008 earnings release, which has been scheduled for Tuesday, July 22, 2008.

“During the second quarter, our risk-based businesses produced a lower level of gross margin than expected, and we also experienced a continuation of the pressures we saw in the first quarter” stated Stephen J. Hemsley, chief executive officer. “We are continuing to take the aggressive specific steps necessary to improve our operating performance, as well as to better position our organization for sustained future growth. We believe the initiatives we have underway will yield these results.”

 

1

Certain second quarter and full year 2008 numbers have been adjusted to exclude a pre-tax charge of $899 million ($0.46 per share after tax) for settlement of two class action lawsuits related to the Company’s historical stock option practices, $40 million pre-tax in operating costs for employee severance ($0.02 per share after tax) related to operating cost reduction initiatives and a $185 million pre-tax reduction in second quarter operating costs ($0.09 per share after tax) for proceeds from the sale of certain assets and membership in the Individual Medicare Advantage business in Nevada in May 2008. Such adjusted numbers are non-GAAP financial measures. Further explanation of these non-GAAP measures and reconciliations to the comparable GAAP measures are included in an attached reconciliation schedule.

 

Page 1 of 4

Gross margin pressures continue to be concentrated in certain of the Company’s health benefits businesses. UnitedHealthcare is experiencing greater-than-expected pressure on premium yields, due to an intensely competitive commercial business environment. Efforts to improve premium yields have resulted in a continuing reduction in risk-based business during 2008, which is a contributing factor to the reduced earnings outlook. Within the Company’s seniors business there is a decrease in the projected gross margin, including gross margin directly related to 2008 benefit levels for Part D prescription drug offerings and for Special Needs Plans serving seniors with chronic conditions.

Among the specific steps to improve performance over the balance of 2008 and into 2009 are revised benefit designs for Special Needs Plans and Part D, changes in commercial market approaches related to underwriting and pricing, and a renewed focus on sales processes, care management and stakeholder relationships at the local market level. The Company is also streamlining enterprise functions in the areas of technology and operations, network management and clinical operations to improve their alignment within the benefits businesses and to enhance their effectiveness and cost efficiency. These and other operating cost actions are also expected to reduce current run-rate operating costs in 2009.

The commercial medical cost trend remains within its previously projected range of 7.5% plus or minus 50 basis points for 2008. UnitedHealth Group projects a full year 2008 consolidated medical care ratio in the range of 82.5 percent, plus or minus 50 basis points, with a UnitedHealthcare commercial medical care ratio in the range of 83.3 percent, plus or minus 50 basis points. This compares with respective previous estimates of 81.3 percent and 82.3 percent, plus or minus 50 basis points.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki