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Eddy Elfenbein submits: UnitedHealth Group (UNH) finally restated its earnings to account for all the stock options charges. Bear in mind, this has no impact on the company’s future direction; it’s merely restating what has already happened:

Health insurer UnitedHealth Group Inc. said Tuesday charges to correct accounting for backdated stock option grants reduced profit by $1.55 billion. The company has filed restated financial results for 2006 and prior years, bringing it up to date in its filings with the Securities and Exchange Commission.

UnitedHealth reported 2006 earnings grew 35 percent to $4.16 billion, or $2.97 per share, from $3.08 billion, or $2.31 per share in 2005. Revenue rose 54 percent to $71.54 billion from $46.43 billion.

Results were helped by the acquisition of PacifiCare in late 2005, pricing of risk-based medical coverages and cost cutting.

UnitedHealth said it will make cash payments for additional corporate income taxes of about $100 million, and will record a charge of $55 million, or 4 cents per share, in the first quarter of 2007 for a settlement relating to some employees who exercised options in 2006.

Under the company's current accounting method, corrections to stock option granting methods lowered profit by $414 million, including $57 million for 2005, $44 million in 2004 and $313 million for the 10-year period ended Dec. 31, 2003.

Under its historic accounting method, the company said charges reduced previously reported profit by $1.13 billion, including $238 million in 2005, $158 million in 2004, and $738 million for all prior years through Dec. 31, 2003.

UnitedHealth has already forecast 2007 earnings between $4.7 billion and $4.75 billion. The problem was that we didn’t know exactly what that worked out to on an earnings-per-share basis. Now we can say that it will be about $3.47 to $3.51 a share.

So now we have a clearer picture. EPS was up 29% last year. It should be up around 17%-18% this year, and the shares are going for about 16 times earnings. Sounds like a bargain to me.

UNH 1-yr chart
UNH

Source: Sounds Like a Bargain: UnitedHealth Group Restates Its Earnings