As UnitedHealth Lowers Guidance, Stock Looks Cheap

As I expected, UnitedHealth (UNH) lowered its profit guidance for this year. The company now sees EPS coming in between $2.95 to $3.05.

Chief Executive Stephen J. Hemsley noted the quarter's results were hurt by lower margins, adding that second-quarter weakness also stems from reduced margins at its risk-based businesses and Medicare operations. "We are continuing to take the aggressive specific steps necessary to improve our operating performance, as well as to better position our organization for sustained future growth," he said. To stop weakness in the risk-based operations, the company has been letting go of some customers who didn't generate enough profits.