UnitedHealth Rises on Fewer Claims

UnitedHealth Group Inc. (NYSE: UNH) reported fiscal third-quarter results before markets opened this morning. The health insurer posted diluted earnings per share (EPS) of $1.50 on revenues of $27.3 billion. In the same period a year ago, the company reported EPS of $1.17 on revenues of $25.3 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $1.31 and $27.6 billion in revenues.

UnitedHealth raised its full-year 2012 EPS guidance to $5.20 to $5.25 and forecast cash flow from operations of $7 billion for the year. The previous forecast had called for EPS of $4.90 to $5.00.

UnitedHealth's CEO said:

Our results were again well balanced across our business groups. We continue to focus on day-to-day execution on behalf of all those we serve throughout health care, while innovating and strengthening our products and services, and broadening our sources of growth, for the long term.

Revenues rose 8% year-over-year in the third quarter, which the company attributed to increases in Medicare and Medicaid plan sales and "strong growth rates" from its OptumHealth division. Revenues for the group rose 19%, and income from operations rose 46% year-over-year and 37% sequentially. OptumHealth's financial services revenues also rose 28% year-over-year.

Operating margins improved by 9.6% year-over-year due to "improvements in medical margins." Payouts for benefits fell 1.4% to 80.2%, which the company attributed to "effective management of medical costs and higher levels of reserve development." Translation: higher premiums, fewer claims.

UnitedHealth's shares are up about 2.6% in premarket trading at $59.00 in a 52-week range is $42.86 to $60.75. Thomson Reuters had a consensus analyst price target of around $68.60 before today's report.

Paul Ausick