UnitedHealth Group Inc., owner of Cypress-based PacifiCare Health Systems, had its share of bad news last year with one of the more notable stock-option backdating scandals. A report in a recent edition of Barron’s suggests the health insurer’s vital signs look good this year.
The company still faces shareholder lawsuits and investigations by the Securities and Exchange Commission, the Internal Revenue Service and the U.S. attorney for the Southern District of New York. But there’s life in the company, according to Barron’s.
“Yet, for all its maladies, the patient is alive and kicking,vigorously, in fact. UnitedHealth’s underlying business is strong and growing, and it is hard to imagine its fortress-like balance sheet, with $2.6 billion of net cash, can’t absorb any fines or accrued taxes the company is likely to owe,” Barron’s wrote.
“Indeed, the Minnetonka, Minn.-based insurer still is considered among the best in the business, hailed for its sophisticated use of technology, innovative culture and nationwide network of healthcare providers,” the story said.
Barron’s cited acquisitions as a key driver of UnitedHealth’s growth in the past five years, including 2005’s buy of PacifiCare. Getting PacifiCare for around $9 billion added 3 million members to UnitedHealth’s roster, brought expansion to California’s healthcare market and in Medicare plans.
The article cited some Wall Street investors’ hopes that UnitedHealth’s stock will follow profits higher. They include Omega Advisors, which holds about 1.1 million shares of UnitedHealth’s 1.4 billion shares.
In the article, Omega said it expects UnitedHealth’s shares to eventually reach $68 a share, some 30% above its recent price.
“All of UnitedHealth’s metrics are significantly ahead of the market,” Omega partner David Mandelbaum said.
Barron’s acknowledged that UnitedHealth’s story still had plenty of skeptics, including Matthew Borsch, a Goldman Sachs & Co. analyst who has a “sell” recommendation on the stock and a $47 price target. Specifically, Borsch warns that UnitedHealth faces acquisition-integration risk and a cyclical slowdown in its health plan business for employers.
UnitedHealth responded that the cycles are regional, not national, with strength in some markets offsetting sharp competition in others.
Hoag Breakers
Foundations that support hospitals generally use relatively sedate ways to raise money. Hoag Memorial Hospital Presbyterian is trying something different, thanks to the Newport Beach Breakers professional tennis team.
Under a recently struck pact, the team, co-owned by Billie Jean King, is set to give profits to the Hoag Hospital Foundation, the Newport Beach hospital’s fund-raising arm. The deal also calls for the foundation to manage the Breakers under a licensing deal with World Team Tennis.
“This is the first time that World Team Tennis has established a relationship with a charity to have the proceeds of the event directly benefit the community, much like the PGA Tour events have done for years,” said Debra Legan, a Hoag spokeswoman.
The Breakers’ matches are set to be played at a 2,200-seat, ocean-view stadium that will be built at the Newport Beach Country Club on Pacific Coast Highway.
The regular season runs through July with playoffs and championship finals running July 27 to 29.
The team is featuring several iconic players.
Pete Sampras, who is the all-time Grand Slam winner in men’s tennis, is going to play for the Breakers during the 2007 season. John McEnroe, Venus Williams and Anna Kournikova are the other marquee players who will be featured.
Beckman’s Profit
Cutting expenses helped Beckman Coulter Inc.’s fourth-quarter profit surge nearly fourfold.
The Fullerton maker of medial testing equipment and supplies said its profit went up 250% to $62.3 million on an 8.6% rise in sales to $712 million.
Wall Street expected Beckman to earn $60.4 million in the quarter.
Beckman said its 2006 profit rose 24.1% to $186.9 million on a 3.5% sales jump to $2.5 billion.
The company also gave its outlook for 2007.
Beckman said it expects to earn $193 million to $202 million this year, excluding special items. It said it expects sales to grow 7% to 9% to $2.71 billion to $2.76 billion.
On a conference call, Chief Executive Scott Garrett said he expected the company to return to double-digit growth in China, and see other improvements in Beckman’s Asian business.
Bits and Pieces:
The Marion Knott Nursing Education Center opened on Hoag Memorial’s campus in Newport Beach. The center is connected to Choose Nursing, Choose Hoag, a taskforce of the Hoag Hospital Foundation that’s working to raise money to support the hospital’s nursing education. Separately, Hoag said that it was ranked among the top 5% of hospitals for overall clinical excellence in a study of mortality and complication rates by HealthGrades, a healthcare rating company Anaheim Memorial Medical Center said it was the only Southern California facility to receive a “best acute care hospitals” award from Total Benchmark Solution LLC, a private rating group. Total Benchmark bases its ratings on quality measurement data from the U.S. Centers for Medicare and Medicaid Services.
