UnitedHealth's Profits Fall on Higher Costs
OKLAHOMA CITY -- UnitedHealth Group (UNH) just gave investors another reason to fret.
The giant health insurer saw its third-quarter profits plummet despite a solid uptick in membership and sales. The company's net income fell 28% to $920 million in the recent quarter as a result of rising medical costs and recent investment losses.
Thanks to a favorable adjustment for legal expenses, however, its earnings per share of 75 cents beat Wall Street expectations by 3 cents.
UnitedHealth topped sales forecasts as well, boasting customer growth across most of its business lines. Revenue climbed 8% to $20.2 billion, inching ahead of the $20 billion consensus estimate.For the fourth quarter, UnitedHealth expects to improve its performance and post earnings of 77 cents a share to 80 cents a share. Analysts, on average, were looking for profits to fall at the low end of that range. Going forward, analysts believe that UnitedHealth's stock could top $32 a share. The stock lost ground on Thursday, however, slipping 3% to $21.03 following the company's disappointing update. While no longer the profit machine it once was, UnitedHealth pointed to new signs of progress in its long-awaited comeback. "The company's solid results reflect the early benefits of a series of actions we initiated to improve our performance," CEO Stephen Hemsley stated on Thursday. "Efforts to strengthen local market execution and improve stakeholder relationships are being well received and have strong potential for longer-term gains. Other steps, such as reducing our operating cost structure and improving the positioning of 2009 benefits for most senior product offerings, should have a continuing favorable effect" this year, he said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV