UnitedHealth reports Q4 net income of $1.2 billion or $0.86/share, beating estimates compiled by Thomson by a penny. Revenue of $18.16b is a 47% y-o-y increase, but missed analysts' average estimate of $18.23b. For calendar year 2006, UNH achieved net income of $4.174b on revenue of $71.7b (+54% y-o-y). Operating margin in Q4 was 11%, compared to a full year margin of 9.7%. UNH reports cash flow from operations totaled $1.6b in Q4 and $6.5b for the year. UNH expects Q1 net income of $980m to $1b and full year '07 net income of $4.7b to $4.75b. It warned these figures are "subject to potential adjustments for non-cash and cash expenses related to stock options matters." UNH also said it "does not yet have an estimated timeline for resolution of these matters." The SEC's investigation of its stock-options practices could cost it more than $600m, according to MarketWatch.
• Sources: Earnings news release [pdf], MarketWatch
• Related commentary: UnitedHealth Reaffirms '07 Outlook, SEC Not Acting Forcefully Enough On United Health Options Probe, UnitedHealth to Restate 12 Years' Worth of Earnings Following Options Scandal
• Potentially impacted stocks and ETFs: UnitedHealth Group (NYSE:UNH). Competitors: Aetna (NYSE:AET), Cigna (NYSE:CI), Coventry Health Care (CVH), Humana (NYSE:HUM), WellPoint (WLP). ETFs: iShares Dow Jones US Healthcare Provider (NYSEARCA:IHF), Vanguard Health Care ETF (NYSEARCA:VHT), Health Care Select Sector SPDR (NYSEARCA:XLV)
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