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TheStreet Open House

Earnings Preview: UnitedHealth Reports On 3Q Tues

Stock quotes in this article: AET, CI, HUM, UNH, WLP

The Associated Press

UnitedHealth Group Inc. has spoiled the surprise for investors by already stating that its third-quarter net income will top Wall Street expectations, but the nation's largest health insurer will release more details on Tuesday.

WHAT TO WATCH FOR: The Minnetonka, Minn., company said Oct. 8 that it expects third-quarter earnings to be at least $1.45 per share. That trumped analyst expectations at the time for about $1.26 per share.

The insurer also said it expects medical enrollment growth of more than 650,000 people in the quarter and that medical costs remained "well managed."

Relatively tame growth in health care costs has helped the performance of UnitedHealth and other major insurers for the past several quarters. Analysts point to a slow economy as a big factor behind this trend, as people put off medical care to save money.

UnitedHealth announced the results the same day it said it planned to take a big leap toward international growth by spending about $4.9 billion to buy a majority stake in Brazilian health benefits and care provider Amil Participacoes SA. The company is the largest health insurer in Brazil and also owns hospitals and clinics. UnitedHealth cited Brazil's growing economy and the potential for private health insurance growth in making the deal.

The acquisition adds another layer of diversity to a business portfolio that investors already like for its variety. Health insurance is UnitedHealth's largest business, but it also operates segments that sell information technology services and pharmacy benefits management.

UnitedHealth also is the largest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people. Company officials have said they expect steady growth in this coverage.

In July, UnitedHealth raised its estimate for full-year earnings to between $4.90 and $5 per share, up from a prior estimate of between $4.80 and $4.95 per share. Investors may see another update on that forecast Tuesday, and they also may gain some sense from company officials about variables that will affect the insurer's 2013 performance.

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