Exhibit 99.1
[LOGO OF UNITED HEALTHCARE CORPORATION]
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News Release
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United HealthCare Corporation(SM)
CONTACTS: David Koppe, CFO
(612) 936-7211
Bernard McDonagh
Vice President, Investor
Relations
(612) 936-7214
Noreen Conway, Vice President
Public Relations and
Communications
(612) 936-1125
(For Immediate Release)
UNITED HEALTHCARE REPORTS SECOND QUARTER
NET EARNINGS GROWTH OF 20 PERCENT
SAME-STORE ENROLLMENT UP 17 PERCENT YEAR-OVER-YEAR;
GAINS SEEN IN MEDICARE ENROLLMENT;
LOW MEDICAL COST TRENDS CONTINUE
MINNEAPOLIS (August 3, 1995) -- United HealthCare Corporation (NYSE:UNH)
announced today that total revenues for the second quarter ended June 30, 1995
increased 23 percent to $1.16 billion compared to $939.5 million for the same
period a year ago. Second quarter net earnings were $89.9 million, up 20
percent from comparable net earnings of $74.9 million for last year's second
quarter. Second quarter 1995 earnings per share were $0.51, a 19 percent
increase over comparable earnings per share of $0.43 for the second quarter of
1994.
(In the second quarter of 1994, the company recorded nonrecurring, non-operating
merger costs of $35.9 million associated with its May 1994 acquisitions of
Complete Health Services, Inc. and Ramsay-HMO, Inc. This reduced second quarter
1994 net earnings before extraordinary gain by $22.3 million, or $0.13 per
share, and resulted in reported second quarter 1994 net earnings before
extraordinary gain of $0.30 per share. In addition, the company's May 1994 sale
of its subsidiary Diversified Pharmaceutical Services, Inc. resulted in a second
quarter 1994 extraordinary gain of $1.38 billion, or $7.85 per share.)
(more)
Public Relations and Communications
P.O. Box 1459
Minneapolis, Minnesota 55440-1459
(612) 936-3693
United HealthCare Corporation
Second Quarter Results
August 3, 1995 -- p. 2
For the six months ended June 30, 1995, total revenues increased 23 percent to
$2.26 billion, compared to $1.84 billion for the same period a year ago. Net
earnings for the six-month 1995 period were $179.3 million, up 23 percent from
comparable net earnings of $145.3 million for the six-month period in 1994.
Earnings per share for the six-month 1995 period were $1.02, a 23 percent
increase over comparable earnings per share of $0.83 for the six-month period in
1994.
United HealthCare Chairman and CEO William McGuire said, "We are pleased with
the second quarter and six month results, particularly during this period of
challenging market conditions and at a time we are making sizable internal
investments in new business development. The strong growth in commercial
enrollment and the acceleration of growth in Medicare enrollment that were seen
during the quarter are very encouraging. While continued investments in new
products and programs have resulted in higher selling, general and
administrative costs, we believe this will have a positive impact on the ongoing
development of United HealthCare. We are particularly pleased to see that our
medical cost trends remain stable and in the low single digits. The minor
increase in the medical expense ratio is predominately a reflection of declines
in Medicaid reimbursement rates in certain Medicaid markets, and because of our
internal decision to selectively increase Medicaid provider reimbursements. Our
commercial business has remained very strong. Inpatient utilization in
particular has continued to decrease. We are encouraged that we have not seen
any unusual or unanticipated system-wide increases in medical costs."
ADDITIONAL HIGHLIGHTS
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ENROLLMENT: Year-over-year same-store enrollment in owned health plans
increased 17 percent, or 399,700 enrollees, with strong growth seen in all
segments. Commercial enrollment was up 16 percent, Medicaid 24 percent, and
Medicare 21 percent.
Second quarter 1995 same-store growth was the best second quarter enrollment in
the company's history, with the addition of 78,400 members. This compares to
the 57,700 enrollees added in the same quarter a year ago. For the six months
ended in June 1995, the company added a total of 264,700 members.
"Our strong second quarter enrollment growth is very encouraging," said Dr.
McGuire, "particularly in light of the fact that our Medicare initiatives are
just beginning, and we are still awaiting the start of a number of state managed
care Medicaid programs. In addition, we are very pleased with our strong
second-quarter commercial enrollment growth given the competitive premium rate
environment in some of our markets. We continue to believe that same-store
enrollment gains of 15-20 percent remain attainable in 1995."
(more)
United HealthCare Corporation
Second Quarter Results
August 3, 1995 -- p. 3
UNITED HEALTHCARE CORPORATION
OWNED HEALTH PLAN ENROLLMENT
JUNE 30, DECEMBER 31,
1995 1994 1994
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Enrollment (re-stated
for pooled acquisitions
only)
Commercial 2,342,300 1,706,200 1,790,500
Medicaid 313,500 253,000 285,400
Medicare 124,600 102,600 108,900
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Total 2,780,400 2,061,800 2,184,800
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Enrollment (same-store
re-stated for all
acquisitions)
Commercial 2,342,300 2,025,100 2,121,400
Medicaid 313,500 253,000 285,400
Medicare 124,600 102,600 108,900
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Total 2,780,400 2,380,700 2,515,700
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MEDICAL COSTS: The company noted that the medical expense ratio, the percent of
premium revenue expensed as medical costs, rose slightly in the second quarter
to 78.6 percent from the 78.1 percent reported for the same quarter a year ago
and from the 78.0 percent reported last quarter.
Commercial and Medicare product results remain very good. For the company's
commercial products, medical cost trends remain in the 1-2 percent range.
Hospital utilization is flat to down, with a very small reciprocal increase in
utilization in the outpatient component of medical costs noted in a few markets.
(more)
United HealthCare Corporation
Second Quarter Results
August 3, 1995 -- p. 4
Physician costs have risen only modestly in some of the company's markets, while
they have decreased in others.
The majority of the second-quarter increase in the medical expense ratio
resulted from the company's Medicaid programs. Several sites contributed to the
increase including:
. The company's new, increased Medicaid enrollment in Rhode Island has had
an initial higher medical expense ratio than experienced in other
markets. This is not totally unexpected, since this is the first program
of its type in that state. This higher utilization should abate over
time as the company gains more experience with the Medicaid population in
this market.
. The company has a very successful, well-regarded Medicaid product in
Illinois and continues to await implementation of the state's previously
announced decision to expand its managed care program for Medicaid. In
anticipation of a larger enrollment base, the company made a strategic
decision to strengthen its provider network and increase reimbursement to
its Medicaid providers in early 1995. This has resulted in a slight
increase in costs at this site.
. The company has received some Medicaid rate reductions in 1995,
particularly in Ohio. This resulted in a small increase in medical
expense ratio for that service line.
SG&A COSTS: SG&A spending was 14.6 percent of revenues for the second
quarter of 1995, up sequentially from the 14.3 percent for the first quarter,
but down significantly from the 15.8 percent reported for the same quarter a
year ago. The sequential increase in spending was due to the company's
continued investments in new and existing programs, including:
MEDICARE: The company remains on-track to meet its goal of having risk
contracts in all of its major owned health plan markets by March 1996.
This effort requires high front-end investments which were manifest in
the second quarter administrative expenses. The addition of 10,000 new
Medicare members in the second quarter is a record for the company and
reflects the early positive results of these efforts. The company
expects continued acceleration in Medicare enrollment in the future
because of these efforts.
(more)
United HealthCare Corporation
Second Quarter Results
August 3, 1995 -- p. 5
INTERNATIONAL: Spending continues on various international initiatives.
The company believes that there are attractive opportunities in this area
and that it is well-positioned to take advantage of them in the future.
CARE FOR THE AGED: Prospects for specialty programs in this area look
particularly encouraging, and the company continues to invest in their
development. Three sites are now operational under the EverCare
Demonstration Project with HCFA, and six more are in development.
Sequentially more positive financial results are expected from these
ongoing efforts.
MANAGED AND SPECIALTY SERVICES: These businesses performed very well in the
quarter. Revenue and operating income each grew 8 percent on a sequential basis
from the first quarter of 1995. Managed health plans realized a strong 19
percent enrollment growth for the 12-month period. Results from the managed
health plans and the company's mental health business, United Behavioral
Systems, were the primary drivers of these favorable results. Managed health
plans and specialty services continue to be an important source of revenue and
earnings for United.
"Overall, we are pleased with our second quarter results," said Dr. McGuire.
"Our enrollment growth has been strong in all segments, and despite a more
competitive market for commercial enrollees, we have maintained our pricing
discipline. Looking ahead, our pending acquisition of MetraHealth will create
an even stronger company with enhanced prospects for superior growth in revenues
and earnings. We look forward to our company having a broader array of products
and skills, expanded sites of service, and additional types of customers as we
continue the growth and development of United HealthCare."
United HealthCare Corporation is a national leader in health care management,
serving purchasers, users, managers and providers of health care since 1974.
The company's broad range of products is offered through 21 locally-based owned
and managed health plans, whose membership exceeds 3.8 million, and its non-
geographically bounded specialty care management companies, which serve the
needs of 27 million-plus lives.
# # # # #
UNITED HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
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1995 1994 1995 1994
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REVENUES
Premiums $1,048,773 $ 835,702 $2,053,262 $1,640,693
Management Service 68,749 77,552 133,973 158,974
Investment Income and Other 40,423 26,211 74,545 43,354
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Total Revenues 1,157,945 939,465 2,261,780 1,843,021
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OPERATING EXPENSES
Medical Costs 824,161 652,266 1,607,662 1,281,844
Selling, General and
Administrative Costs 169,519 148,168 327,097 291,534
Depreciation and Amortization 20,384 16,378 40,049 32,281
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Total Operating Expenses 1,014,064 816,812 1,974,808 1,605,659
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EARNINGS FROM OPERATIONS 143,881 122,653 286,972 237,362
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Interest Expense (378) (569) (558) (1,137)
Merger Costs -- (35,940) -- (35,940)
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EARNINGS BEFORE INCOME TAXES,
MINORITY INTERESTS AND
EXTRAORDINARY GAIN 143,503 86,144 286,414 200,285
Provision for Income Taxes (53,096) (33,031) (105,974) (76,098)
Minority Interests in Net
Earnings of consolidated
Subsidiaries (528) (457) (1,129) (1,133)
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NET EARNINGS BEFORE
EXTRAORDINARY GAIN 89,879 52,656 179,311 123,054
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Extraordinary Gain on Sale of
Subsidiary, net of Income
Taxes of $808,758 -- 1,377,075 -- 1,377,075
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NET EARNINGS $ 89,879 $1,429,731 $ 179,311 $1,500,129
Net Earnings Per Share Before
Extraordinary Gain $0.51 $0.30 $1.02 $0.70
Extraordinary Gain Per Share -- 7.85 -- 7.86
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Net Earnings Per Share $0.51 $8.15 $1.02 $8.56
Weighted Average Number of Common
Shares Outstanding 176,304 175,490 176,390 175,160
UNITED HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, 1995 DECEMBER 31, 1994
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(UNAUDITED)
ASSETS
Cash and Short-term Investments $1,031,172 $1,654,336
Other Current Assets 272,943 253,879
Long-Term Investments 1,456,333 1,115,054
Other Long Term Assets 995,538 466,210
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TOTAL ASSETS $3,755,986 $3,489,479
LIABILITIES AND
SHAREHOLDERS' EQUITY
Medical Services Payables $ 473,612 $ 443,559
Other Current Liabilities 230,051 220,743
Long-term Obligations 20,545 24,275
TOTAL LIABILITIES 724,208 688,577
Minority Interests 6,374 5,446
Shareholders' Equity 3,025,404 2,795,456
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,755,986 $3,489,479
UNITED HEALTHCARE CORPORATION
EARNINGS REPORT*
(In thousands, except per share data)
Three Months Ended
June 30, 1995 June 30, 1994
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Revenues $1,157,945 $ 939,465
Net earnings before extraordinary gain $ 89,879 52,656
Extraordinary gain on sale of subsidiary -- 1,377,075
Net earnings 89,879 $1,429,731
Net earnings per share before
extraordinary gain $ 0.51 $ 0.30*
Extraordinary gain per share -- 7.85
Net earnings per share $ 0.51 $ 8.15
Average number of common shares
outstanding 176,304 175,490
Six Months Ended
June 30, 1995 June 30, 1994
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Revenues $2,261,780 $1,843,021
Net earnings before extraordinary gain $ 179,311 $ 123,054
Extraordinary gain on sale of subsidiary -- 1,377,075
Net earnings $ 179,311 $1,500,129
Net earnings per share before
extraordinary gain $ 1.02 $ 0.70*
Extraordinary gain per share -- 7.86
Net earnings per share $ 1.02 $ 8.56
Average number of common shares
outstanding 176,390 175,160
*The financial information for the three and six months ended June 30, 1994, has
been restated to include the results of Ramsay-HMO, Inc. and Complete Health
Services, Inc. in accordance with pooling of interests accounting. Excluding
the nonrecurring, non-operating costs of $35.9 million associated with the
Ramsay and Complete mergers, net earnings before extraordinary gain for the
three and six months ended June 30, 1994 would have been $74,939 and $145,337,
respectively, or $0.43 and $0.83 per share.