UnitedHealth quarterly profit rises 3 percent

NEW YORK (Reuters) - UnitedHealth Group Inc (UNH.N) said on Tuesday that fourth-quarter earnings rose 3 percent, in line with Wall Street's target, helped by improved performance in its Medicaid plans for low-income Americans and its health-care analytics unit.

Higher spending to market its Medicare plans for seniors and seasonally high use of medical services in its commercial plans for employers tempered results at the largest U.S. health insurer by market value.

Net income increased to $1.22 billion, or 92 cents per share, from $1.18 billion, or 84 cents per share, a year earlier. Revenue rose 3 percent to $18.7 billion.

Minneapolis-based UnitedHealth said its consolidated medical care ratio, a key measure of the percentage of premiums spent on medical costs, improved slightly to 79.9 percent from 80 percent a year earlier.

The ratio for UnitedHealthcare, a unit that serves small and mid-sized businesses, worsened to 83.7 percent from 81.6 percent, reflecting higher seasonal use of medical services and an accrual from a state ruling that lowered premium revenue.

Revenue at the Americhoice business, which serves Medicaid members, rose 24 percent to $1.2 billion.

Earnings from operations at its Ingenix health-care data and analysis business soared 62 percent to $120 million.

The company maintained its 2008 earnings forecast of $3.95 to $4 per share, an increase of as much as about 14 percent over adjusted 2007 results. It projected first-quarter earnings of 82 cents to 84 cents per share.

Analysts on average expect 84 cents for the first quarter and $3.97 for 2008, according to Reuters Estimates.

The company provided medical benefits to 31 million members as of the end of December, down slightly from the end of the third quarter as it had fewer members in its commercial plans, which serve employers.

UnitedHealth faces growth concerns about its commercial plans as it tries to overcome self-admitted service problems.

Since the start of the fourth quarter, the company's shares have climbed about 13 percent, outpacing a nearly 8 percent rise for the S&P Managed Healthcare index .GSPHMO.

(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Maureen Bavdek)