Minn. UnitedHealth Says 2nd Quarter Profits Rose by 26.5 Percent

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UnitedHealth Group Inc., America’s second-largest health insurer, said its quarterly profits grew 26.5 percent, as the company benefited from the acquisition of PacifiCare Health Systems and growth across its other businesses.

The company also raised its guidance for the rest of 2006 and issued bullish 2007 guidance. Its shares rose $1.51, or 3 percent, to $49.91 in morning trading on the New York Stock Exchange.

The Minnesota-based company said it earned $974 million, or 70 cents per share, during the second quarter ending June 30, up from $770 million, or 58 cents per share, during the same period last year. Revenue was $17.92 billion, up 57 percent from $11.39 billion a year ago.

Analysts surveyed by Thomson Financial on average had expected earnings of 68 cents per share on revenue of $17.96 billion.

UnitedHealth said earnings would accelerate as the year goes on because it absorbed startup costs for the new Medicare Part D prescription drug program during the first half of the year. It said it would have earned another $43 million, or 3 cents per share, if those costs were spread throughout the year.

Its Part D program had enrolled 5.7 million people as of June 30, more than any other insurer. The program generated revenue of $1.5 billion (euro1.2 billion) and its loss shrank during the second quarter, the company said.

“The Part D business is well on track to provide positive contributions to earnings … in the third and fourth quarters,” the company said.

UnitedHealth raised its 2006 profit guidance to $2.91 to $2.95 per share, and said 2007 earnings would be $3.35 to 3.39 per share.

“Our performance to date is tracking better than forecast and sets the stage for a strong 2006 as well as 2007,” Chairman and Chief Executive William McGuire said on a conference call with analysts.

The company offered no update on the investigations into its stock-options practices, which have drawn scrutiny from federal regulators and a subpoena from the U.S. Attorney’s Office in the Southern District of New York. On May 11 it acknowledged a “significant deficiency”‘ in its handling of stock options.