UnitedHealth Sees 2011 Hit From Economy, Overhaul
MINNETONKA, Minn. (AP) -- Managed care company UnitedHealth Group Inc. said Tuesday economic stagnation, the health care overhaul and pressure on government programs like Medicare and Medicaid will affect its performance heading into the new year.
The Minnetonka, Minn., health insurer expects a rise in medical enrollment but a drop in earnings per share next year compared to its 2010 projections. CEO Stephen J. Hemsley said during the company's investor conference in New York City UnitedHealth has taken an "appropriate and measured position" as it nears 2011.
"We will work to overcome and outperform these obstacles," he said during a Webcast.
UnitedHealth forecasts 2011 earnings of $3.50 to $3.70 per share, down from its projection for 2010 of $3.85 to $3.95 per share. It expects 2011 revenue to range from $99 billion to $100 billion, up from its 2010 projection of about $94 billion.
Analysts polled by Thomson Reuters expect, on average, earnings of $3.64 next year and $3.97 this year.
UnitedHealth projects medical enrollment to range from 33.3 million to 33.6 million next year, up from 32.7 million in the third quarter of this year.
Hemsley told investors trends that favored health insurers in 2010 are uncertain and not built into the company's 2011 outlook. These include a moderation in health care use and claims leftover from previous quarters that came in lower than the insurer expected.
Company executives also have said they expect to take a hit in their commercial insurance business from new minimum medical loss ratio requirements that start in 2011. The health care overhaul calls for insurers to spend a minimum of 80 percent of their premiums on medical care for small-group and individual business and 85 percent for large-group business.
A company spokesman declined to detail the expected impact from this new regulation.
Increased government regulation like the medical loss ratio requirements will pressure UnitedHealth, Executive Vice President Gail Boudreaux told investors. But she said the company's national scale and local market knowledge give them confidence that they can adjust.
"Adapting to market changes is not new to us . and we have extensive experience operating in highly regulated environments," she said.
UnitedHealth is the largest publicly traded health insurer based on revenue. The fourth-largest, Humana Inc., said earlier this month it also expects 2011 earnings to slip due in part to conservative guidance for its Medicare Advantage business.
Other major health insurers like WellPoint Inc. and Aetna Inc. will hold their investor conferences in the first few months of 2011.
UnitedHealth shares fell 15 cents to $36.44 in midday trading Tuesday.
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