http://www.startribune.com/business/98829729.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUFUnitedHealth Group reported sharply higher-than-expected profit in the second quarter, as its commercial business recovered somewhat from the weak economy and its Medicare and Medicaid businesses continued to grow.
For the quarter ended June 30,
net income was up 31 percent to $1.12 billion from a year earlier. Revenue grew 7 percent to $23.26 billion. That worked out to earnings of 99 cents per share, outstripping analyst expectations of 75 cents per share.
Chief executive Stephen Hemsley said the company had used innovation and size to offer
"products that have more affordable cost and a better health care experience" resulting in stronger than expected revenue for the company.
(In other words, products with really high deductibles that guarantee UHG will be paying fewer claims)
UnitedHealth raised its financial outlook and now expects full year revenue of $93 billion and net income of between $3.40 and $3.60 per share.
Medical costs for the quarter were also lower than expected. The second quarter medical care ratio - how much of each premium dollar goes to medical care – was 81.5 percent, down 210 basis points year-over-year, partly due to a milder flu season and lighter use of medical care due to a winter storm in the northeast of the country.
During the company's morning call with Wall Street analysts, officials were peppered with questions on how federal health reform will affect UnitedHealth's many businesses. "While people are justifiably focused on health reform, that is only one element of the market dynamic," Hemsley said, adding that the market offered both challenges and opportunities for UnitedHealth.