In an announcement for its annual investor conference tomorrow, UnitedHealth Group Inc. (NYSE: UNH) reaffirmed its earnings per share (EPS) forecast for 2012 at $5.20 to $5.25. But in its first estimate of fiscal 2013 EPS, the health insurance provider forecast EPS of $5.25 to $5.50 on revenues of $123 to $124 billion.

The 2013 forecast for EPS is below the consensus estimate of $5.58, while the revenue forecast is higher than the consensus estimate of $119.12 billion.

Although the announcement contained no details, a couple of things could be happening here. In UnitedHealth’s most recent quarter, the company reported that benefit payouts had fallen and that margins had improved by 9.6%. If forecast revenue is as high as UnitedHealth thinks it will be, then margins seem set to shrink in 2013.

Another issue could be costs. As the company gets set for the 2014 introduction of Obamacare’s mandatory medical insurance and the state exchanges that will be available, UnitedHealth may be looking at boosting its promotional costs to get new business from the 30 million or so Americans who currently do not purchase health insurance. That pool is a veritable gold-mine for insurers like UnitedHealth, WellPoint Inc. (NYSE: WLP), Cigna Corp. (NYSE: CI) and others, provided they can get new customers to sign up.

What this appears to add up to is more premiums resulting in higher revenues but lower profits because more sick people will be signing up. And if this is the case with UnitedHealth, it also is likely to be the case at other insurers.

UnitedHealth’s shares are down about 1.5% this morning, at $53.12 in a 52-week range of $43.47 to $60.75.

Paul Ausick

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