UnitedHealth Group Inc. agreed to settle options suits
03 07 08 - 12:04
From Chicago Tribune news services
UnitedHealth Group Inc. agreed to the biggest settlement of lawsuits involving backdated stock options and said it would trim 4,000 jobs, about 5 percent of its workforce, as part of a restructuring.
The large U.S. health insurer said Wednesday that it would pay about $900 million to end two class-action cases over grants of stock options to executives.
The Minnetonka, Minn.-based company last year restated earnings dating to 1994 because of a backdating probe that cost former Chief Executive William McGuire his job in 2006.
The company also Wednesday cut its annual earnings forecast for the second time. UnitedHealth now forecasts 2008 adjusted profit of $2.95 to $3.05 per share on revenue in the $81 billion range, down from prior estimates of $3.55 to $3.60 per share. Analysts surveyed by Thomson Financial expected profit of $3.52 per share on revenue of $81.02 billion.
UnitedHealth cited reduced commercial business and higher-than-expected Medicare-related costs for its lowered outlook.
UnitedHealth said its restructuring would change operations on every level to focus more on regional coverage.
The new UnitedHealth will be "simpler, leaner and faster," Chief Executive Stephen J. Hemsley said.
Under the new regionalized management structure, UnitedHealthcare will serve all commercial benefits markets, including national accounts previously under the Uniprise brand.
Analysts saw the announcements as perhaps the end of a long rough patch for UnitedHealth. Shares fell 51 cents, or 2 percent, to $25.12.
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