UnitedHealth Posts Penny Beat

Earnings surged 21% in UnitedHealth's ( UNH) third quarter as each of the insurer's business lines reported profit growth.

The company, whose stock is a market darling that has doubled over two years, earned $842 million, or 64 cents a share, in the quarter, compared with $698 million, or 52 cents a share, a year ago. Revenue rose 15% from a year ago to $11.32 billion.

Analysts surveyed by Thomson First Call had been forecasting earnings of 63 cents a share on sales of $11.33 billion. UnitedHealth guided full-year results to $2.48 a share, a penny better than estimates, and sees 2006 EPS growth of at least 15%, implying at least $2.85 a share. The 2006 consensus estimate is $2.93 a share for 2006.

In the company's biggest segment, health care services, revenue rose 14% from a year ago to $9.95 billion, while operating earnings rose 28% to $976 million. Improved results at AmeriChoice, UnitedHealth and Ovation offset higher marketing and administrative costs, the company said.

Within the segment, third-quarter revenue at the flagship UnitedHealth HMO rose 14% from last year to $6.8 billion, with the unit adding 265,000 people to its coverage rolls in the quarter. The unit's commercial medical ratio, a measure of cost efficiency, was 78% in the quarter, down from 78.6% a year ago and in the second quarter.

The stock closed Thursday at $54.20, about 18.5 times next year's estimated earnings.

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