UnitedHealth Group, Minnetonka, Minn., posted a 36% rise in second-quarter earnings, reflecting enrollment growth and easing medical costs. Results included a $140 million benefit from overestimating medical costs in 2004 and the first quarter of 2005. Net income for the three months ended June 30 reached $809 million, or 61 cents per share, up from $596 million, or 47 cents per share, in the year-ago quarter. Revenue rose 28% to $11.1 billion, as medical enrollment grew 15% over the year-ago period to 23.3 million members. For the full year, UnitedHealth expects per-share earnings to rise about 25% to between $2.45 and $2.47. The company also said it would spend $75 million and hire 600 people to prepare for the new Medicare prescription-drug benefit, which becomes available Jan. 1.
UnitedHealth, the nation's second-largest insurer after WellPoint, agreed this month to acquire Medicare HMO giant PacifiCare Health Systems in a $9.2 billion deal that would add about 3.3 million members and 5 cents to 6 cents to per-share earnings in the first year. The deal is expected to close in late 2005 or early 2006. -- by Laura B. Benko