MINNETONKA, Minn. (AP) — Managed care company UnitedHealth Group Inc. said Monday it expects a drop in earnings per share next year compared to its 2010 projections, despite an anticipated revenue increase.
The Minnetonka, Minn., health insurer 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 per share of $3.64 for 2011 and $3.97 for this year.
UnitedHealth did not elaborate on the expected earnings slip in a brief statement issued Monday. It said it will discuss its outlook Tuesday during its annual investor conference in New York City.
Goldman Sachs analyst Matthew Borsch said in a research note the insurer pointed to an earnings decline when it discussed its third-quarter performance last month and said the drop was tied mainly to Medicare Advantage profit margins and the health care overhaul’s minimum medical loss ratios, which measure the percentage of premiums an insurer spends on care.
“We believe investors will view the new guidance range positively relative to recent speculation that the range might be lower,” he said.
UnitedHealth is the largest publicly traded health insurer based on revenue. Humana Inc., the fourth-largest insurer based on revenue, said earlier this month it also expects 2011 earnings to slip due in part to conservative guidance for its Medicare Advantage business.
Humana also expects medical cost trends for its commercial health insurance to revert to higher levels next year. Several insurers said recently a drop in health care use helped them report better-than-expected third-quarter earnings and raise their 2010 profit forecasts.
Its shares fell 16 cents to $35.72 in morning trading Monday.
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