By Susan A. Baird
PBN Web Editor
MINNEAPOLIS – UnitedHealth Group (NYSE:UNH), the nation’s largest health insurer, today posted a second-quarter profit of $1.46 billion, a 29.5-percent decline from the year-ago period’s $2.07 billion, while earnings per diluted share fell 25 percent year over year to 67 cents.
But, the company said, excluding certain “special items” – one-time expenses and income that included $922 million in legal fees and settlement costs from two class-action suits related to the company’s past stock-option practices; $46 million in employee severance costs; and a $185 million gain from the May sale of certain assets of the individual Medicare Advantage – “per-share earnings exceeded the company’s revised outlook provided in early July.”
“During the first and second quarters, we initiated important actions to improve our performance, and we are seeing progress on those actions that we expect will strengthen our company and our future financial results,” President and CEO Stephen J. Hemsley said in a statement today.
Those actions have included leadership and other changes at the company’s UnitedHealthcare and Ovations segments; benefit changes to UnitedHealth’s Medicare offerings for 2009 “that are expected to improve margins in certain Medicare Part D and Special Needs Plan offerings”; a re-examination of work-force needs; and revisions to commercial-market pricing.
Total second-quarter revenue increased 6.7 percent compared with a year ago to $20.7 billion billion. Among segments, revenue from health care services – UnitedHealthcare and Uniprise – rose to $18.94 billion from the year-ago $17.97 billion; OptumHealth revenue rose to $1.32 billion from the 2007 second quarter’s $1.24 billion; Igenix revenue rose to $381 million from the year-ago $284 million; and the Eliminations segment’s second-quarter loss narrowed to $3.55 billion from the year-ago period’s $3.79 billion. But revenue in the Prescription Solutions segment fell to $3.17 billion from the 2007 second quarter’s $3.30 billion.
UnitedHealth Group’s overall operating margin shrank to 6.0 percent, from the first quarter’s 7.2 percent and the 2007 second quarter’s 9.7 percent. But the number of people served each month continued to rise, to 73,075 last month from 73,070 in March and 71,095 in June 2007, UnitedHealth said.
“A number of areas of strength reflect the benefits of our diversified businesses and strategy,” Hemsley said. “Our public-sector Medicaid business is building toward record organic revenue growth in 2009; our fee-based benefits businesses are stable and ahead of original 2008 membership plans; and generic pharmaceutical utilization and mail service usage by customers of our pharmacy benefit management business are up sharply. Our Medicare supplement products are growing steadily and our health information technology and service offerings continue to produce solid growth as well.”
Going forward, the company said, UnitedHealth “continues to anticipate full year 2008 net earnings per share in the range of $2.95 to $3.05 per share. … The company expects to continue its substantive share repurchase program over the course of 2008, with a total of more than $3 billion in repurchase activity planned for the full year, after considering cash payments for legal settlements.”
UnitedHealth Group (NYSE:UNH) is a diversified health and well-being company based in Minneapolis, Minn. It offers a broad spectrum of products and services through six operating businesses – UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix – serving about 70 million individuals nationwide. Additional information is available at www.unitedhealthgroup.com.
