Health services provider UnitedHealth Group (NYSE:UNH) will report first-quarter 2007 financial results on Thursday, April 19.

What analysts say:

  • Buy, sell, or waffle? Of the 21 analysts covering UnitedHealth, a heart-stopping 15 of them view the company as a buy. Only five say "hold," and one analyst -- apparently expecting a corporate coronary -- says "sell."
  • Revenue. Revenue is expected to grow nearly 10% for the quarter, to $19.3 billion.
  • Earnings. Profits, meanwhile, are anticipated to jump more than 12% to $0.71 per share.

What management says:
The health services juggernaut that is UnitedHealth Group rolls on. Its controversial bid to acquire Nevada-based Sierra Health Services (NYSE:SIE) -- a merger opposed by the American Medical Association, on the grounds that the company would become a virtual HMO monopoly in that state -- would indeed create a more formidable force in health care. Nor are doctors pleased with UnitedHealth's plan to fine them if they continuously refer patients to out-of-network labs for testing. They're accusing the HMO of trying to milk its new deal with Lab Corp (NYSE:LH) for maximum revenue enhancement, since Quest Diagnostics (NYSE:DGX) -- which was sent packing by UnitedHealth -- is the only real, viable alternative.

For its part, the services provider says Sierra Health is the "best-in-class" provider that will "significantly strengthen our growth platform in the region." It promises that physician penalties would be imposed "sparingly," and are only being implemented to save patients money, since out-of-network costs can run seven times higher than in-network services.

What management does:
There shouldn't be any shortfall in revenue at UnitedHealth, though margins might continue to get squeezed. That would help explain the company's recent moves to consolidate markets and keep doctors in line. However, with cuts anticipated in its Medicare Advantage program, UnitedHealth's longer-term profitability might be compromised.

Margin

12/05

03/06

06/06

09/06

12/06

Gross

27.5%

26.5%

25.9%

25.5%

25.5%

Operating

10.9%

10.1%

9.7%

9.6%

9.8%

Net

6.6%

6.1%

5.8%

5.7%

5.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Last summer's stock-option hullabaloo was merely a sideshow, though emblematic of a company that perhaps had enjoyed the laurels of its success too much. Yet it also created an opportunity for investors to buy at a discount a company that was otherwise a proven winner and realize substantial appreciation. It now trades again at some all-time highs, but is valued at a premium to competitors like Aetna (NYSE:AET) and WellPoint (NYSE:WLP). Although the immediate future might be healthy, a longer-term prognosis could soon find the stock wheezing.

Related Foolishness:

UnitedHealth Group has earned a five-star rating from Motley Fool CAPS, the new investor-intelligence community. You can add your voice to the new stock-rating service by joining today. It's free!

UnitedHealth is a recommendation of both Motley Fool Stock Advisor and Motley Fool Inside Value. Lab Corp is a recommendation of Stock Advisor as well.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.