UnitedHealth Group Inc
) reported its first-quarter 2013 earnings of $1.16 per share, in
line with the Zacks Consensus Estimate. Earnings, however,
declined 11.4% on a year-over-year basis.
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UnitedHealth posted revenues of $30.3 billion, up 11.2% year over
year and was almost in line with the Zacks Consensus Estimate.
The year-over-year increase was an outcome of broad-based organic
growth and business expansion in both health care benefits and
health care services.
During the quarter, UnitedHealth's medical costs increased 13.2%
year over year to $22.6 billion. Total operating costs increased
nearly 13% year over year to $28.2 billion.
During the reported quarter, UnitedHealth's health benefits
segment - UnitedHealthcare - witnessed revenue growth of 11.0%
year over year to $28.3 billion. Earnings from operations,
however, declined 23.8% to $1.6 billion.
Revenue from the company's other segment - the health services
segment branded as Optum - improved 15% to $8.4 billion on a
year-over-year basis. Earnings from operations, however, surged
96% year over year to $495 million. Continued progress on Optum's
plan to accelerate growth and improve margins and productivity by
strengthening integration and business alignment aided the
UnitedHealth had 42.0 million members in its enrollment at the
end of the quarter, up 6.445 million year over year.
UnitedHealthcare implemented the new TRICARE military health care
award from Apr 1, 2013. It added 2.9 million military market
The first 3 million new and migrating UnitedHealthcare commercial
consumers moved successfully to pharmacy benefit manager OptumRx.
Cash flow from operations was $1.1 billion in the quarter, in
line with the prior-year quarter. Management continues to expect
cash flow from operations to exceed 130% of net earnings on a
full year basis.
On a year-over-year basis, first-quarter 2013 days sales
outstanding in accounts receivable of 9.5 days and days claims
payable of 47 days both increased by one day.
Cash and short-term investments increased 14.2% to $13.1 million
at first-quarter end from 2012-end level.
Long-term debt increased 11.5% from 2012-end level to $15.6
million at first quarter 2013-end.
Share Repurchases and Dividend
UnitedHealth Group spent $543 million to buyback 10 million
shares in the first quarter. The company paid $216 million in
dividends to shareholders.
UnitedHealth expects to generate $122 billion in revenue, an
increase of nearly 10% from 2012 level. However, this is lower
than revenue of $123-$124 million guided earlier.
Net earnings are still expected between $5.25 and $5.50 per
UnitedHealth currently carries a Zacks Rank #3 (Hold). Healthcare
Health Net, Inc
) with Zacks Rank #1 (Strong Buy) is scheduled to release its
first-quarter earnings on Apr 29, while
Coventry Health Care Inc
WellCare Health Plans, Inc
) with a Zacks Rank #2 (Buy) are slated to announce their results
on Apr 22 and May 3, respectively.