UnitedHealth Group 2nd Qtr 2008 Earnings Beats The Street

UNITEDHEALTH GROUP REPORTS SECOND QUARTER RESULTS
• Revenues Increased 7% to $20.3 Billion
• People Served Increased 2 Million to 73 Million
• Adjusted Operating Margin of 7.2%
• Adjusted Net Earnings of $0.67 Per Share

UnitedHealth Group said profit for the three months ended June 30 fell to $337 million in the second quarter, or 27 cents a share, down from $1.23 billion or 89 cents a share a year ago.
Excluding special charges totaling 49 cents a share tied to the legal settlements and employee severance, along with a 9-cent gain from asset sales, second-quarter 2008 earnings were 67 cents a share, the Minnetonka, Minn.-based insurer said. Consensus expectations were for earnings of 64 cents, according to analysts surveyed by FactSet Research.

Shares were up 8% in recent action to $25.72.
The company said it still expects full-year 2008 earnings of $2.95 to $3.05 a share, and plans to continue its share-repurchase program, buying back more than $3 billion in repurchases over the full year. This is after considering cash payments for legal settlements.
"Health insurers have flexibility in reporting medical-expense estimates and earnings per share, so the second-quarter beat also signals comfort with 2008 guidance," Citigroup's Charles Boorady wrote in a morning note to clients.
Analysts also noted that the company's reported medical-loss ratio, or the cost of providing health care, rose 290 basis points to 83.2% for the quarter, but that was well below what many analysts had forecast. The company expects its full-year cost ratio to come in at 82.5%.

Outlook
The Company continues to anticipate full year 2008 net earnings per share in the range of $2.95 to $3.05 per share and cash flows from operations approaching $5 billion1, as adjusted. 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.