Money Matters - Simplified

UnitedHealth reports 21% rise in Q1 earnings

UnitedHealth has largely benefited from strong growth in the employer-based plans, and Medicare and Medicaid plans.

Surpassing analysts’ expectations, UnitedHealth Group Inc., the largest insurer in the nation, has reported 22 percent increase in its earnings for the first quarter, ending March 31.

The net income in the first quarter this year stood at $1.19 billion, or $1.03 cents a share, which is much higher than $984 million, or 81 cents, a year earlier.

Explaining the strong quarter, the company said it has received "better market responses, and there has been “strong business retention."

Recovering from slowdown
The health insurers in the nation had been adversely affected by recession. Nearly all of them had witnessed a drop in the enrollments in their commercial plans due to rising unemployment.

With the global economic slowdown nearing end, many are on the road to recovery.

UnitedHealth has largely benefited from strong growth in the employer-based plans, and Medicare and Medicaid plans.

Based on this, the company has reported a 5 percent increase in revenue to $23.2 billion.

Revenue from the Medicare plan, which is for the elderly, jumped 10 percent to $9.3 billion. Further, the revenue from Medicaid plans, which is for the poor, increased 22 percent to $2.3 billion.

UnitedHealth is anticipating earnings of $3.15 to $3.35 a share for the fiscal year 2010. This is up from its Jan. 21 forecast, when it had said that the company is expecting net profit of $2.90 to $3.10 a share for this year.

Raising expectations for 2010
Backed by better than expected membership and services growth, the company is expected to perform well in the fiscal year 2010.

The company’s chief executive officer, Stephen Hemsley, has added approximately 155,000 members in Medicare plans in 2010.

Going by the strong numbers, Joshua Raskin, an analyst at Barclay’s Capital Inc, told BussinessWeek, “It appears that Medicare membership has started strong and we continue to believe that guidance for 2010 will prove conservative.”

UnitedHealth is anticipating earnings of $3.15 to $3.35 a share for the fiscal year 2010. This is up from its Jan. 21 forecast, when it had said that the company is expecting net profit of $2.90 to $3.10 a share for this year.

The company is currently projecting $92 billion as revenue for this fiscal year.