UnitedHealth suffers financial setback

Wed, 23 Apr 2008 06:59:58 -0400

After years of allegations that management engaged in financial manipulations to feather their own nest, some might see this as a bit of karma. Having already missed its first quarter financial targets, UHG has had to cut its full-year profit outlook. The company, which expects 2008 revenue around $82 billion, lowered its profit outlook by 40 cents a share to about $3.60. While UHG faces some unique challenges, this mirrors losses posted by other health plans, many of which seem likely to kick up premiums substantially at their next opportunity.

One major factor in UHG's adjusted prediction was customer losses. The company lost 530,000 commercial members during Q1 of this year, including 250,000 from its PacifiCare unit. Meanwhile, enrollment in its Medicare Part D program fell by 290,000. To boot, medical costs went up faster than income, despite raised premiums in 2006 and 2007.

This comes just as the air has started to clear from its former CEO's departure. Less than 18 months ago, former CEO William McGuire left the company with a mindbogglingly-golden parachute, options worth $1.78 billion at the time. Since then, McGuire has been forced to give up at least $400 million in assets, after regulators concluded that the options were back-dated to give him the highest possible value.

To learn more about UHG's financial picture:
- read this Modern Healthcare piece (reg. req.)

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