continued its winning ways Thursday, posting healthy fourth-quarter gains and boosting 2006 guidance.
The Minneapolis-based health insurer made $870 million, or 65 cents a share, for the quarter ended Dec. 31, up from the year-ago $739 million, or 54 cents a share. Revenue rose to $12.05 billion from $10.51 billion a year earlier.
Fourth-quarter earnings included 2 cents a share in market launch expenses for the Medicare Part D prescription drug benefit program. Excluding the market launch expenses, fourth-quarter earnings of 67 cents a share gained 24% year-over-year.
The figures exceeded the Thomson First Call analyst consensus estimate, which had called for a 65-cent profit on sales of $11.7 billion.
"I am pleased to report both strong 2005 results and a very favorable 2006 outlook, supported by accelerating internal growth and expanding business opportunities," said CEO William McGuire. "Our growth prospects across all of our business units directly reflect our ability to help the health care system work more effectively and, in turn, enhance the accessibility and affordability of services. Based on our strong position and business momentum entering 2006, we now anticipate a further increase in our earnings per share growth to a range of 21 percent to 23 percent over our 2005 results."
The company said revenue rose 15% from a year ago and adjusted cash flow exceeded $900 million for the fourth quarter. Operating costs represented 15.5% of revenues in the fourth quarter, including about 40 basis points or approximately $50 million in market launch expenses for the Medicare Part D prescription drug benefit program. Excluding these market launch expenses, the fourth quarter 2005 operating cost ratio of 15.1% was stable year-over-year. The full-year reported operating cost ratio of 15.0% improved significantly from 15.4% in 2004. Excluding market launch expenses, the full-year operating cost ratio was 14.9%.
UnitedHealth also forecast earnings of $2.85 to $2.90 a share in 2006, including stock-based compensation costs. The company had previously forecast earnings of $2.82 to $2.85 a share. The figure compares with earnings of $2.36 a share in 2005, including an adjustment to reflect 12 cents a share in noncash stock compensation costs in 2005. Analysts surveyed by Thomson First Call were looking for $2.91 a share.