UnitedHealth Takes DoD to Court - Analyst Blog
June 27 2011 - 11:16AM
Zacks
UnitedHealthcare, a division of UnitedHealth Group
Inc. (UNH) sued the U.S. Department of Defense (DoD) in
the U.S. Court of Federal Claims after it lost the $23.5 billion
5-year Tricare South contract to Humana Inc.
(HUM).
The Tricare South contract covers 3 million military members and
their families in 11 southern states. In July 2009, UnitedHealth
won the contract form Humana. But after continuous protests by
Humana, DoD reviewed
its decision and awarded the
$23.5 billion 5-year contract to Humana in February
2011.
Updating the TRICARE West
Region contract, earlier, in April 2011, DoD invited fresh bids for
TRICARE West Region contract after UnitedHealthcare’s Military
& Veterans business raised an objection. As such, UnitedHealth
will get another chance to win a $17 billion contract to provide
health benefits to soldiers in 21 western states, including
Minnesota.
Together, the two contracts
would have net more than $40 billion over six years, including a
handsome management fees.
UnitedHealth Group reported
first quarter 2011 net earnings of $1.22 per share, well ahead of
the Zacks Consensus Estimate as well as year-ago earnings, aided by
strong revenue growth from UnitedHealthcare as well as Optum
.
At its earnings conference
call, the company guided its 2011 revenues to gross $101
billion and earnings in the range of $3.95 to $4.05 per share.
The Zacks Consensus Estimate for first-quarter 2011 is 93 cents
per share. For full years 2011 and 2012, the Zacks Consensus
Estimates are, respectively, $4.19 and $4.65.
We maintain a Neutral recommendation on UnitedHealth Group over
the long term. The quantitative Zacks #3 Rank (short-term Hold
rating) for the company indicates no clear directional pressure on
the stock over the near term.
Headquartered in Minnesota, UnitedHealth Group Inc. through its
diversified businesses, leverages core competencies in advanced
technology-based transactional capabilities; health care data,
knowledge and information; and health care resource organization
and care facilitation to improve access to health and well-being
services, simplify the medical experience, promote quality and make
health care more affordable. It competes with Aetna
Inc. (AET) and WellPoint Inc. (WLP).
AETNA INC-NEW (AET): Free Stock Analysis Report
HUMANA INC NEW (HUM): Free Stock Analysis Report
UNITEDHEALTH GP (UNH): Free Stock Analysis Report
WELLPOINT INC (WLP): Free Stock Analysis Report
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