United settles lawsuits, warns of falling profits
Executives didn't say whether United's problems will change the way it does business with doctors. But they did say the company is looking to improve savings and boost revenues on a local level.
United issued a series of press releases on July 2, with announcements concerning profits, layoffs, reorganizations and an agreement in two federal class-action lawsuits.
ProfitsThe company's profits for 2008 will be lower than previously projected. The company revised its year-end forecast from an estimated $3.55 to $3.60 per share, projected in April, to between $2.95 and $3.05 per share, a drop of between 15% and 17%.
The company is still projecting $6.5 billion in earnings from operations, down from $8 billion in 2007. These are earnings from operations, not net earnings after such items as income taxes and depreciation -- net earnings were $4.65 billion in 2007.
United CEO Stephen Hemsley blamed enrollment drops and higher-than-expected costs, particularly in its Medicare business, for lowered expectations for the year.
LawsuitsThe company reached an agreement to settle two federal class-action lawsuits over alleged stock-option backdating.
United, and current and former executives, have faced multiple investigations and lawsuits since 2006 over allegations the company improperly backdated stock-option grants to executives. Backdating -- adjusting the option grant price to a day when the company's stock peaked -- is not illegal, but must be reported to investors.
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