UnitedHealth posts $1.2 billion quarterly profit

NEW YORK (Reuters) - Insurer UnitedHealth Group Inc. <UNH.N>, which is trying to emerge from a stock options scandal, reported fourth-quarter net earnings of $1.2 billion on Thursday, slightly above estimates, helped by its Medicare prescription drug plans for seniors.

But UnitedHealth shares dropped 2.25 percent after the company cut its forecast for enrollment in its full-service Medicare Advantage health plans, citing problems with marketing execution.

"What it says is this is not a company that is firing on all cylinders," CRT Capital Group analyst Sheryl Skolnick said.

Skolnick and other analysts also noted the stock had run up more than 10 percent in the past month, and investors may have been disappointed that the company did not boost its 2007 profit forecast.

The largest U.S. health insurer by market value, which is reviewing its past accounting, had previously said year-earlier results were not reliable for comparison because past reported costs did not correctly reflect compensation expenses related to option grants.

UnitedHealth did not provide earnings-per-share figures but said it had 1.4 billion diluted, weighted-average common shares outstanding in the fourth quarter. On that basis, earnings were nearly 86 cents per share. Analysts' average forecast was 85 cents, according to Reuters Estimates.

UnitedHealth said it still expects 2007 net income of $4.7 billion to $4.75 billion, or an increase of as much as 14 percent from 2006's $4.17 billion, subject to adjustments for expenses tied to the stock options review.

"The upward trade in the stock into this quarter suggests some investors may have anticipated the company would raise 2007 guidance," Goldman Sachs analyst Matthew Borsch wrote in a research note.

Skolnick said it was not unusual for UnitedHealth shares to fall on its earnings report. "Unless they blow the quarter out of the water, the stock never goes up on earnings day," she said.

Fourth-quarter revenue rose 47 percent to $18.16 billion, helped by UnitedHealth's acquisition of PacifiCare Health Systems and its Medicare Part D plans. Analysts had expected $18.08 billion.

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UnitedHealth's Part D plans, which provide prescription drug benefits under the federal Medicare insurance program for the elderly, served 5.74 million members as of the end the year.