UnitedHealth Group Inc., a managed care company with 3,900 workers in Orange County, saw its stock slide earlier this month over concerns that its bid to win Medicare contracts would ding profits.
UnitedHealth’s shares fell nearly 7% on June 11, after some analysts said the Minnesota-based company’s profits would be reduced in 2010 based on bids for government contracts.
UnitedHealth officials gave Wall Street a peek at what it expected in 2010, including bid details. The company said it expects thinner profits next year based on its Medicare HMO bids.
Afterward, analyst Carl McDonald of Oppenheimer & Co. downgraded the managed care company to “underperform” from “perform.”
UnitedHealth is assuming that Medicare expenses are going to be reduced in line with an expected 21% drop in doctors’ expenses, McDonald said. But many believe that healthcare reform, which could reduce Medicare expenses, won’t be passed by Congress in time for Medicare’s new fiscal year, which starts in October.
By contrast, UnitedHealth’s competitors believe Medicare Advantage rates will fall about 5% next year with costs going up about 5%, McDonald said.
He cut his 2010 profit estimate for UnitedHealth to $3.5 billion from a previous estimate of $3.9 billion, which also is the consensus view among analysts for 2010.
McDonald’s downgrade came at a time when President Obama has requested Congress to craft a healthcare reform proposal by the fall. Earlier this month, Obama said that he would like Americans to have the choice of a public health insurance plan operating alongside private insurance plans.
UnitedHealth could be looking to gain long-term market share, according to Charles Boorady of Citigroup Investment Research.
He said he expected UnitedHealth to “absorb an expected mismatch between premium cuts and medical cost growth in order to take share in a year we expect others to shed enrollment and preserve margin.”
UCI-Grown
A medical device maker that grew out of technology developed at the University of California, Irvine, has received financial backing.
SoundCure Inc., which will be based in OC, received an undisclosed investment from Allied Minds Inc., a Quincy, Mass.-based seed investor that specializes in university-related, early-stage business ventures.
SoundCure is working to commercialize a treatment for tinnitus, a ringing in the ears that affects nearly one in five people. A recent study from the Department of Veterans Affairs noted that tinnitus was the most commonly found disability for troops returning from combat, as it can be caused by excessive exposure to loud noises.
The company’s device uses customized sound frequencies and pulsed tones designed to counter the effects of tinnitus in patients. Fan-Gang Zeng and Qing Tang, a pair of UC Irvine researchers, developed the technology that’s at the core of SoundCure.
SoundCure is aiming to replace traditional therapies for tinnitus, which involve long retraining regimes or drugs that have side effects.
CHOC Wing
Children’s Hospital of Orange County said it added an adolescent and young adult wing to its cancer unit.
The hospital spent $1.4 million on the unit, which was built by Fullerton-based Miles & Kelley Construction Co. FKP Architects of Houston designed the unit, with local support from Irvine-based WBSA Architects. Jacobs Engineering Group Inc. was the project manager.
CHOC’s wing is made up of three rooms with six beds that it says are geared to the needs of teenage cancer patients,they include individual TVs and PlayStation consoles. The addition also includes an Anaheim Ducks-themed wing, a resource area for patients and their families and a conference room.
Bits and Pieces:
In other UCI news, the university said that its inaugural class of 36 nursing science students received their bachelor’s degrees earlier this month. The university also said it received accreditation of its nursing program from the Commission on Collegiate Nursing Education Endologix Inc., an Irvine medical device maker, launched its InutiTrak Express Delivery system for treating abdominal aortic aneurysms, or ballooning of blood vessels. InutiTrak allows doctors to insert Endologix’s Powerlink XL stent into the ballooned blood vessel West Anaheim Medical Center, which is owned by Victorville-based Prime Healthcare Services Inc., is among one of the country’s top 100 hospitals, according to Thomson Reuters Corp. West Anaheim is the only OC hospital on the list The Adaptive Business Leaders Organization, an Orange industry group, is accepting nominations for its upcoming Innovations in Healthcare awards event. For more information, call (714) 245-1427 Irvine-based PharmaGenoma Inc. said that it launched a European subsidiary, HairDX Europe, which produces genetic tests to predict the risk of male and female hair
loss.
