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Earnings Rise At UnitedHealth

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Revenue growth helped UnitedHealth Group Inc. overcome lower health care services profit margins during the first quarter.

UnitedHealth, Minnetonka, Minn., is reporting $899 million in net income for the latest quarter on $18 billion in revenue, up from $743 million in net income on $11 billion in revenue for the first quarter of 2005.

UnitedHealth is predicting that its new Medicare Part D prescription drug plans will achieve an operating profit margin of about 3% over the course of the year, but the plans started out with a negative profit margin, or loss, of about 7%.

Because of the startup losses at the Part D plans, which UnitedHealth is attributing to program accounting rules, UnitedHealth’s health care services unit operating profit margin fell to 6.7% during the first quarter, down from 9.2% during the first quarter of 2005.

An increase in health care services revenue to $16 billion, from $9.6 billion, pushed total unit operating earnings to $1.1 billion, from $881 million, despite the drop in the profit margin.