Costs Down at UnitedHealth - TheStreet

Costs Down at UnitedHealth

The health insurer hits targets.
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UnitedHealth (UNH) - Get Report beat second-quarter earnings targets as its closely watched medical cost trends moved in the right direction.

The Minneapolis-based health insurer made $1.2 billion, or 87 cents a share, for the quarter ended June 30, up from the year-ago $981 million, or 70 cents a share. Revenue rose to $18.93 billion from $17.86 billion, with non-GAAP revenue -- reflecting different practices for recognizing Medicare prescription drug revenue -- was $19.05 billion.

Analysts surveyed by Thomson Financial were looking for an 81-cent profit on sales of $19.1 billion.

UnitedHealth said earnings from operations rose 21% from a year ago and its operating margin rose 140 basis points to 10.7%. The consolidated medical care ratio of 80.5% improved 110 basis points year-over-year and 220 basis points sequentially. The company said the ratio, which reflects the proportion of premium dollars spent on patient care, showed continued strong performance across Ovations seniors businesses, partially offset by increases in the UnitedHealthcare medical care ratio. Wall Street has been keeping an eye on this figure ever since UnitedHealth posted an unexpected spike in medical care costs back in January.

The latest report could help get UnitedHealth back in favor with investors, who have seen the stock stagnate for the last year after a long run of success broken by last year's options scandal. In the meantime, many have taken to rival

Aetna

(AET)

, which is due to post earnings next week.

UnitedHealth guided in line for the year, saying it expects to make $3.43 to $3.48 a share, compared with a $3.45 Thomson target.