UnitedHealth Looks Healthy

UnitedHealth's ( UNH) second-quarter earnings rose a stronger-than-expected 36% from last year, as the HMO wrung more costs out of its insurance operations and continued to boost revenue and membership.

The company, which closed Wednesday about midway between its 52-week high and low at $61.90, guided its full-year results to the high end of estimates.

UnitedHealth earned $596 million, or 93 cents a share, in the three months to June 30, compared with earnings of $439 million, or 71 cents a share, last year. Revenue rose 23% to $8.7 billion. Analysts had been forecasting earnings of 92 cents a share on revenue of $8.65 billion, according to Thomson First Call.

UnitedHealth said 2004 earnings will be between $3.79 and $3.82 a share. The consensus forecast is for earnings of $3.79 a share.

The company said operating costs in the latest quarter came in at 15.5% of revenue, about 140 basis points narrower than in the year-ago period. Accounts receivable at the company stood at 5.6 days sales outstanding at the end of the quarter, while medical costs payable stood at 68 days.

UnitedHealthcare had 9.3 million customers at June 30, 2004, up 19% from a year ago.

"We expect strong results from our businesses in the second half of this year," the company said. "Our internal revenue growth rate is poised to accelerate, and recent strategic acquisitions will provide meaningful advances for customers as well as strong financial contributions to our company."

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