earnings

In the latest twist in the stock-option backdating story, UnitedHealth Group said that it may have to restate earnings for the past three years. That could cost the company as much as $286 million. Meanwhile, the health services giant admits in a regulatory filing that it is the object of an "informal" SEC probe into its stock option granting processes. UnitedHealth shares fell $1.70 to $44.47 in morning trading.

- read this The Wall Street Journal article (sub. req.)

The New York Times wonders if 2006 might turn out to be a long overdue bad year for insurers in the wake of the recent problems at UnitedHealth Group. Shares of health insurers are down 8.6 percent since January first according to Standard & Poors. On the other hand, that's led some on Wall Street to wonder if companies like United and WellPoint are actually bargains at the moment. Some observers are wondering if the investor uncertainty may have a lot to do with the chaotic …

After years of excellent numbers, some critics are starting to wonder if things are about to take a turn for the worse at UnitedHealth. Goldman Sachs analyst Matthew Borsch reiterated his underperform rating for the company this weekend. Borsch says problems at recently acquired PacifiCare, "market noise on deteriorating customer service" and questions about corporate governance are "red flags" that should not be taken lightly. Borsch notes that PacifiCare earnings in California have …

Following an internal audit, the Dallas-based healthcare provider Tenet said on Thursday that it must restate earnings from 2000 to 2004. Investors were not deterred by the news, however. The company's shares are up again slightly this morning, as traders appear to be guessing that the news means that the company will finally be able to put its troubles behind it. Some analysts, including critics in a dissident shareholder group, had predicted that the audit would uncover far more serious …

Shares of hospital chains fell across the board yesterday as Wall Street took note of earnings guidance issued by LifePoint and Triad on Monday. LifePoint shares were by far the hardest hit, dropping 20 percent. HCA, Health Management Associates and Tenet all joined in on the slump but show signs of recovery today. UBS analyst Kenneth Weakley notes that the sector faces "challenges in the year to come" in light of soft admission trends, pricing pressure and ongoing bad debt. The downturn …

> The Department of Justice has asked Pfizer for information on its dealings with physicians. Article (Wall Street Journal sub. req.)

> Research published in the Journal of the American Medical Association finds that PDAs equipped with CPOE tools can help cut down on the overprescription of antibiotics. …

Guidant Corporation announced that it will sue Johnson & Johnson in an effort to force the completion of the merger of the two companies. The news came on the same day at that the SEC announced it will investigate the circumstances surrounding Guidant's recall of its faulty defibrillators and pacemakers. The device maker also released 3Q numbers which show just how bad things have gotten. Guidant's earnings are down to $795 million for the quarter, a drop of 14 percent. The company …

The nation's largest health plan in terms of market cap continues to put up dominant numbers. UnitedHealth Group said its third-quarter revenue climbed 15 percent to $11.3 billion and net income rose 21 percent to $842 million. The performance impressed analysts who had been expecting slightly lower earnings. The big story of the quarter for UnitedHealth, of course, is the PacifiCare merger, which is expected to give the company a big boost, assuming the deal overcomes objections from …

HCA said this morning that its third-quarter profit will probably not match Wall Street's estimates as damage from the Gulf Coast hurricanes takes its toll. The company projects earnings of between 61 cents to 63 cents per share, lower than the 66 cents per share analysts had expected. HCA said it will buy back up to 50 million of its shares. The stock was up slightly on the combined news.

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Despite hitting an all-time high in revenue for the fourth quarter, Cardinal Health reported a loss, with earnings down 27 percent. The Dublin, Ohio-based company says costs related to its restructuring plan are to blame. Cardinal launched an ambitious three-year reorganization, announcing plans to lay off nearly 5,000 workers and move to a fee-for-service business model.

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