<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 29, 1996
-----------------
UNITED HEALTHCARE CORPORATION
-----------------------------
(exact name of registrant as specified in charter)
MINNESOTA
---------
(State or other jurisdiction of incorporation)
0-13253 41-1321939
------- ----------
(Commission File Number) (IRS Employer Identification No.)
300 OPUS CENTER, 9900 BREN ROAD EAST, MINNETONKA, MN 55343
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 936-1300
--------------
<PAGE>
Item 5. Other Events
On February 29, 1996, the Registrant announced its financial results for the
fourth quarter and fiscal year ended December 31, 1995.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
- --- --------
Exhibit 99.1 - United HealthCare Corporation Press Release, dated
February 29, 1996.
Exhibit 99.2 - Supplemental Financial Schedules related to financial
results for the fourth quarter ended December 31, 1995.
2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED HEALTHCARE CORPORATION
-----------------------------
(Registrant)
By /s/David P. Koppe
-------------------------
David P. Koppe
Vice President, Treasurer and
Chief Financial Officer
Date: February 29, 1996
3
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page No.
- -------------- ----------- -------
99.1 United HealthCare Corporation Press
Release dated February 29, 1996. 5
99.2 Supplemental Financial Schedules related
to financial results for the fourth quarter
ended December 31, 1995. 14
4
<PAGE>
Exhibit 99.1
[LETTERHEAD OF UNITED HEALTHCARE CORPORATION APPEARS HERE]
CONTACTS: David Koppe, CFO
(612) 939-7211
Bernard McDonagh
Vice President, Investor
Relations
(612) 936-7214
Susan Busch
Director, Communications
(612) 992-5132
(For Immediate Release)
UNITED HEALTHCARE REPORTS RECORD
FOURTH QUARTER EARNINGS AND FULL YEAR 1995 OPERATING RESULTS:
RESTRUCTURING CHARGES OF $153.8 MILLION RELATED TO
THE METRAHEALTH ACQUISITION
Company Reports Acceleration to 21 Percent Growth in
Health Plan Enrollment
Fourth Quarter Operating Earnings of $0.57 Per Share Reported
Full Year 1995 Operating Earnings $2.12 Per Share
MINNEAPOLIS (February 29, 1996) -- United HealthCare Corporation (NYSE UNH)
announced today that total revenues for the fourth quarter ended December 31,
1995 increased 126.4 percent to $2.19 billion compared to $969.0 million for the
same period a year ago. Financial results for the fourth quarter 1995 include
The MetraHealth Companies, Inc., which was purchased by the company on October
2, 1995. Fourth quarter net earnings (excluding restructuring charges
associated with the MetraHealth transaction of $153.8 million pretax, or $0.54
per common share) were $109.9 million, up 30.4 percent from net operating
earnings of $84.2 million for last year's fourth quarter. Fourth quarter 1995
earnings per common share before restructuring charges were $0.57, a 19 percent
increase over operating earnings per common share of $0.48 for the fourth
quarter of 1994.
(more)
Public Relations and Communications
P.O. Box 1459
Minneapolis, Minnesota 55440-1459
(612) 936-3693
<PAGE>
United HealthCare Corporation
Fourth Quarter and Full Year 1995 Operating Results
February 29, 1996 -- 2
For the full year 1995, total revenues increased 50.5 percent to $5.67 billion
compared to $3.77 billion for 1994. Net earnings for 1995 (excluding
restructuring charges) were $382.9 million, up 23.3 percent from net operating
earnings of $310.4 million reported in 1994. Earnings per common share for 1995
(excluding restructuring charges) were $2.12, a 20 percent increase over
operating earnings of $1.77 per common share reported in 1994.
United HealthCare Chairman and CEO, William McGuire, M.D., said "We are very
pleased with our company's calendar year and fourth quarter operating results.
In spite of the increased competitive pressures we experienced in 1995, both the
operating performance and enrollment growth of the company remained strong. In
fact, enrollment accelerated from already outstanding trends. For example, in
the combined United and MetraHealth markets, we added a total of 351,600 health
plan enrollees over the four month period from October 1995 through January
1996. This included 206,800 enrollees in the month of January alone.
Importantly, we currently believe the excellent commercial and Medicare
enrollment growth trends will continue in our health plans -- both in terms of
new sales and conversion of existing MetraHealth indemnity customers. The
progress of the MetraHealth integration and its early performance are also very
encouraging."
The $153.8 million in restructuring charges associated with the MetraHealth
acquisition reflects the expected impact on United HealthCare's operations of
integrating the business activities of the combined companies. It includes
provision for business realignment and elimination in the areas of
administration, products, networks, information systems, and duplicate leased
facilities.
Additional Highlights
- ---------------------
Record 1995 Enrollment: On a same store basis, e.g. excluding the acquired
- -----------------------
MetraHealth markets, United's health plans experienced record growth:
. Fourth quarter 1995 same store total enrollment was up 120,100 or 4.1
percent. This is almost double the comparable 64,800 enrollees added in the
fourth quarter 1994.
. December year-over-year same store enrollment was up 527,400 or 21 percent.
. Fourth quarter Medicare enrollment increased 10,700 or 7.8 percent from
the previous quarter.
. Full year Medicare enrollment was up 38,900 or 35.7 percent from the
previous year.
. Fourth quarter Medicaid enrollment grew 21,400 or 6.5 percent from the
previous quarter.
. Full year Medicaid enrollment increased 66,700 or 23.4 percent from the
previous year.
(more)
<PAGE>
United HealthCare Corporation
Fourth Quarter and Full Year 1995 Operating Results
February 29, 1996 -- 3
This momentum carried into 1996 with January enrollment in these owned United
HealthCare plans up 166,300 or 5.5 percent over December 1995. January results
included a 5,500 increase in Medicare enrollment.
Health plan enrollment in former MetraHealth markets in the month of January
1996 grew a very strong 8.8 percent, up to 40,500 enrollees, to a total of
502,300 enrollees. The company believes that this growth underscores the
potential of these markets and products, and the opportunity for movement of
business from indemnity/non-network products towards managed care solutions.
Medical Costs: The company noted that the aggregate medical expense ratio, the
- --------------
percent of premium revenue expensed as medical costs, rose to 81.6 percent in
the fourth quarter of 1995 from 79.3 percent in the third quarter of 1995. This
rise is primarily attributed to the shift in the mix of business with the fourth
quarter addition of MetraHealth. Viewed separately, the company's commercial
and Medicare health plan products experienced stable health costs from third to
fourth quarter 1995, even with their large enrollment growth.
For the full-year 1995, the aggregate medical expense ratio was 79.7 percent.
This compares to the 78.3 percent medical expense ratio reported for the full-
year 1994. This higher ratio is largely attributable to the slightly higher
medical expense ratio experienced by United HealthCare during 1995 (primarily in
its Medicaid products) and to the shift in the mix of business resulting from
the fourth quarter 1995 acquisition of MetraHealth.
SG&A Ratios: SG&A spending was 24.2 percent of total revenues for the fourth
- ------------
quarter of 1995 compared to the 14.3 percent reported in the third quarter of
1995. This increase is due to higher SG&A ratios associated with the former
MetraHealth products as a greater proportion of that business consists of fee-
based/self-funded products rather than full-premium/funded type products. For
the full-year 1995, SG&A spending was 18.2 percent of total revenues. This
compares to the 14.7 percent reported in 1994.
The company has already realized SG&A savings as a result of the MetraHealth
integration, and currently expects that SG&A, as a percent of total revenues,
will decrease in 1996 from the ratio reported in the fourth quarter of 1995.
(more)
<PAGE>
United HealthCare Corporation
Fourth Quarter and Full Year 1995 Operating Results
February 29, 1996 -- 4
McGuire added, "For United HealthCare as well as for the managed care industry
as a whole, 1995 was a challenging year. In previous years we succeeded in
substantially reducing the rate of medical inflation in our health plans. In
1995 we were faced with the challenge to continue to grow the business, control
costs, and produce growth in revenue and profits in an environment that saw
little, if any, increases in premiums. I believe that United HealthCare
weathered this environment extremely well. Paced by record enrollment growth, a
new focus on our Medicare business, and continued attention to controlling costs
while still committing significant investment to systems development, product
expansion, and growth of overseas markets, we were once again able to show
outstanding growth in revenue and earnings. We believe that the acquisition of
MetraHealth at the beginning of the fourth quarter strengthens the company's
ability to realize sustained growth by broadening both our range of products and
the geography we now serve. United HealthCare is extremely well-positioned to
help ensure that our nation's health care system is accessible, accountable, and
cost effective."
# # # # #
<PAGE>
UNITED HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
----------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Premium $1,778,080 $877,317 $4,931,355 $3,376,238
Management Services and Fees 369,367 55,822 579,707 274,616
Investment Income and Other 46,115 35,888 159,816 118,028
----------- ----------- ----------- -----------
Total Revenues 2,193,562 969,027 5,670,878 3,768,882
----------- ----------- ----------- -----------
OPERATING EXPENSES
Medical Costs 1,450,913 685,613 3,930,933 2,643,107
Selling, General and
Administrative Costs 530,542 130,653 1,030,906 555,649
Depreciation and Amortization 35,066 15,540 94,458 64,079
Restructuring Charges 153,796 -- 153,796 --
----------- ----------- ----------- -----------
Total Operating Expenses 2,170,317 831,806 5,210,093 3,262,835
----------- ----------- ----------- -----------
EARNINGS FROM OPERATIONS 23,245 137,221 460,785 506,047
Interest Expense (67) (613) (771) (2,163)
Merger Costs -- -- -- (35,940)
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES
MINORITY INTERESTS AND
EXTRAORDINARY GAIN 23,178 136,608 460,014 467,944
Provision for Income Taxes (8,576) (51,914) (170,205) (177,822)
Minority Interests in Net Earnings
of Consolidated Subsidiaries (1,619) (451) (3,845) (1,983)
----------- ----------- ----------- -----------
NET EARNINGS BEFORE
EXTRAORDINARY GAIN 12,983 84,243 285,964 288,139
Extraordinary Gain on Sale of
Subsidiary, net of income
taxes of $808,758 -- -- -- 1,377,075
----------- ----------- ----------- -----------
NET EARNINGS 12,983 84,243 285,964 1,665,214
Preferred Dividends (7,188) -- (7,188) --
----------- ----------- ----------- -----------
NET EARNINGS APPLICABLE TO
COMMON SHAREHOLDERS $5,795 $84,243 $278,776 $1,665,214
=========== =========== =========== ===========
Net Earnings Per Common Share Before
Extraordinary Gain $0.03 $0.48 $1.57 $1.64
Extraordinary Gain Per Common Share -- -- -- 7.86
----------- ----------- ----------- -----------
Net Earnings Per Common Share $0.03 $0.48 $1.57 $9.50
=========== =========== =========== ===========
Weighted Average Number of Common
Shares Outstanding 179,478 176,573 177,443 175,209
=========== =========== =========== ===========
</TABLE>
<PAGE>
UNITED HEALTHCARE CORPORATION
ENROLLMENT
BY PRODUCT TYPE
<TABLE>
<CAPTION>
December 1995 January 1996 Percent Change
-------------- ------------- --------------
<S> <C> <C> <C>
HMO & HMO POS
- -------------
Former UHC
- Commercial 2,543,200 2,702,200 6.3%
- Medicare 147,800 153,300 3.7%
- Medicaid 352,100 353,900 0.5%
-------------- -------------
Subtotal 3,043,100 3,209,400 5.5%
Former MetraHealth
- Commercial 461,800 502,300 8.8%
-------------- -------------
Total HMO & HMO POS 3,504,900 3,711,700 5.9%
Other Network-Based Products
- ----------------------------
Former UHC
- Commercial 286,600 276,300 -3.6%
Former MetraHealth
- Commercial 5,451,100 5,454,800 0.1%
-------------- -------------
Total Other Network-Based Products 5,737,700 5,731,100 -0.1%
Indemnity
- ---------
Former MetraHealth
- Commercial 4,367,400 4,053,700 -7.2%
-------------- -------------
Grand Total 13,610,000 13,496,500 -0.8%
============== =============
</TABLE>
<PAGE>
UNITED HEALTHCARE CORPORATION
ENROLLMENT
BY FUNDING MECHANISM AND PRODUCT TYPE
<TABLE>
<CAPTION>
December 1995 January 1996
------------------------------------- -------------------------------------
Funded Self-funded Total Funded Self-funded Total
------ ----------- ----- ------ ----------- -----
<S> <C> <C> <C> <C> <C> <C>
HMO & HMO POS
- -------------
Former UHC 2,837,700 205,400 3,043,100 2,981,100 228,300 3,209,400
Former MetraHealth 424,200 37,600 461,800 463,400 38,900 502,300
--------- --------- ---------- --------- --------- ----------
Total HMO & HMO POS 3,261,900 243,000 3,504,900 3,444,500 267,200 3,711,700
Other Network-Based Products
- ----------------------------
Former UHC -- 286,600 286,600 -- 276,300 276,300
Former MetraHealth 699,300 4,751,800 5,451,100 792,500 4,662,300 5,454,800
--------- --------- ---------- --------- --------- ----------
Total Other Network-Based Products 699,300 5,038,400 5,737,700 792,500 4,938,600 5,731,100
Indemnity
- ---------
Former MetraHealth 982,600 3,384,800 4,367,400 924,500 3,129,200 4,053,700
--------- --------- ---------- --------- --------- ----------
Grand Total 4,943,800 8,666,200 13,610,000 5,161,500 8,335,000 13,496,500
========= ========= ========== ========= ========= ==========
</TABLE>
<PAGE>
UNITED HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------ ------------------
<S> <C> <C>
ASSETS
Cash and Short-term Investments $1,803,925 $1,654,336
Other Current Assets 1,118,415 253,879
Long-term Investments 1,274,470 1,115,054
Other Long Term Assets 2,019,395 466,210
------------------ ------------------
TOTAL ASSETS $6,216,205 $3,489,479
================== ==================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Medical Services Payables $1,177,021 $443,559
Other Current Liabilities 1,310,046 220,743
Long-term Obligations 33,300 24,275
------------------ ------------------
TOTAL LIABILITIES 2,520,367 688,577
Minority Interests 7,818 5,446
5.75% Convertible Preferred Stock 500,000 ---
Shareholders' Equity 3,188,020 2,795,456
------------------ ------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $6,216,205 $3,489,479
================== ==================
</TABLE>
<PAGE>
UNITED HEALTHCARE CORPORATION
EARNINGS REPORT
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Revenues $2,193,562 $969,027
Net earnings $12,983 * $84,243
Preferred dividends (7,188) --
----------------- -----------------
Net earnings applicable to common shareholders $5,795 $84,243
================= =================
Net earnings per common share $0.03 * $0.48
================= =================
Average number of common shares
outstanding 179,478 176,573
<CAPTION>
Year Ended
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Revenues $5,670,878 $3,768,882
Net earnings before extraordinary gain $285,964 * $288,139 **
Extraordinary gain on sale of subsidiary -- 1,377,075 ***
----------------- -----------------
Net earnings 285,964 * 1,665,214
Preferred dividends (7,188) --
----------------- -----------------
Net earnings applicable to common shareholders $278,776 $1,665,214
================= =================
Net earnings per common share before
extraordinary gain $1.57 * $1.64 **
Extraordinary gain per common share -- 7.86 ***
----------------- -----------------
Net earnings per common share $1.57 * $9.50
================= =================
Average number of common shares
outstanding 177,443 175,209
</TABLE>
* Excluding fourth quarter restructuring charges of $153.8 million ($96.9
million after tax, or $0.54 per common share) associated with the MetraHealth
acquisition, net earnings for the three and twelve month periods ending
December 31, 1995 would have been $109.9 million and $382.9 million, or $0.57
and $2.12 per common share.
** Excluding nonrecurring, non-operating costs of $35.9 million ($22.3 million
after tax, or $0.13 per common share) associated with the May 1994 Ramsay and
Complete Health acquisitions, net earnings before extraordinary gain for the
year ended December 31, 1994 would have been $310.4 million, or $1.77 per
common share.
***The company sold its subsidiary, Diversified Pharmaceutical Services, Inc.,
in May 1994 for $2.3 billion, resulting in an extraordinary gain of $1.38
billion, or $7.86 per common share.
<PAGE>
Exhibit 99.2
UNITED HEALTHCARE CORPORATION SCHEDULE A
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (000's)
<TABLE>
<CAPTION>
% CHANGE
3 MONTHS ENDED % 3 MONTHS ENDED % 12/31/94 to
12/31/95 (4) REVENUE 12/31/94 REVENUE 12/31/95
------------- --------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
PREMIUM .......................................... $ 1,778,080 81.1% $ 877,317 90.5% 102.7%
MANAGEMENT SERVICES AND FEES...................... 369,367 16.8% 55,822 5.8% 561.7%
INVESTMENT INCOME................................. 46,115 2.1% 35,888 3.7% 28.5%
------------- --------- -------------- --------- -----------
TOTAL REVENUES ................................. 2,193,562 100.0% 969,027 100.0% 126.4%
OPERATING EXPENSES:
MEDICAL COSTS (1) ................................ 1,450,913 81.6% (1) 685,613 78.1%(1) 111.6%
SELLING, GENERAL & ADMINISTRATION ................ 530,542 24.2% 130,653 13.5% 306.1%
DEPRECIATION & AMORTIZATION ...................... 35,066 1.6% 15,540 1.6% 125.6%
RESTRUCTURING CHARGES (5)......................... 153,796 (5) ------
------------- --------- -------------- --------- -----------
TOTAL OPERATING EXPENSES ....................... 2,170,317 98.9% 831,806 85.8% 160.9%
EARNINGS FROM OPERATIONS ............................. 23,245 1.1% 137,221 14.2% -83.1%
------------- --------- -------------- --------- -----------
INTEREST EXPENSE ..................................... (67) (613)
MERGER COSTS (2) ..................................... ------ ------
------------- --------------
EARNINGS BEFORE INCOME TAXES AND MINORITY
INTERESTS AND EXTRAORDINARY GAIN ................... 23,178 136,608
PROVISION FOR INCOME TAXES ........................... (8,576) (51,914)
MINORITY INTERESTS ................................... (1,619) (451)
------------- --------------
NET EARNINGS BEFORE EXTRAORDINARY GAIN ............... 12,983 (5) 84,243
EXTRAORDINARY GAIN ON SALE OF SUBSIDIARY,
NET OF INCOME TAXES OF $808,758 (3)................. ------ ------
------------- --------------
NET EARNINGS ......................................... 12,983 (5) 84,243
PREFERRED DIVIDENDS .................................. (7,188) ------
------------- --------------
NET EARNINGS APPLICABLE TO COMMON
SHAREHOLDERS ...................................... $ 5,795 $ 84,243
============= ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING: 179,478 176,573
============= ==============
EARNINGS PER SHARE:
NET EARNINGS BEFORE EXTRAORDINARY GAIN (2) $ 0.03 (5) $ 0.48
EXTRAORDINARY GAIN (3) ------ ------
------------- --------------
NET EARNINGS PER SHARE COMMON SHAREHOLDER $ 0.03 (5) $ 0.48
============= ==============
<CAPTION>
% CHANGE
12 MONTHS ENDED % 12 MONTHS ENDED % 12/31/94 to
12/31/95 (4) REVENUE 12/31/94 REVENUE 12/31/95
------------- --------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
PREMIUM ......................................... $ 4,931,355 87.0% $ 3,376,238 89.6% 46.1%
MANAGEMENT SERVICES AND FEES...................... 579,707 10.2% 274,616 7.3% 111.1%
INVESTMENT INCOME................................. 159,816 2.8% 118,028 3.1% 35.4%
------------- --------- -------------- --------- -----------
TOTAL REVENUES ................................. 5,670,878 100.0% 3,768,882 100.0% 50.5%
OPERATING EXPENSES:
MEDICAL COSTS (1) ................................ 3,930,933 79.7%(1) 2,643,107 78.3%(1) 48.7%
SELLING, GENERAL & ADMINISTRATION ................ 1,030,906 18.2% 555,649 14.7% 85.5%
DEPRECIATION & AMORTIZATION ...................... 94,458 1.7% 64,079 1.7% 47.4%
RESTRUCTURING CHARGES (5)......................... 153,796 (5) ------
------------- --------- -------------- --------- -----------
TOTAL OPERATING EXPENSES ....................... 5,210,093 91.9% 3,262,835 86.6% 59.7%
------------- --------- -------------- --------- -----------
EARNINGS FROM OPERATIONS ............................. 460,785 8.1% 506,047 13.4% -8.9%
INTEREST EXPENSE ..................................... (771) (2,163)
MERGER COSTS (2) ..................................... ------ (35,940)(2)
------------- --------------
EARNINGS BEFORE INCOME TAXES AND MINORITY
INTERESTS AND EXTRAORDINARY GAIN ................... 460,014 467,944
PROVISION FOR INCOME TAXES ........................... (170,205) (177,822)
MINORITY INTERESTS ................................... (3,845) (1,983)
------------- --------------
NET EARNINGS BEFORE EXTRAORDINARY GAIN ............... 285,964 (5) 288,139 (2)
EXTRAORDINARY GAIN ON SALE OF SUBSIDIARY,
NET OF INCOME TAXES OF $808,758 (3)................. ------ 1,377,075 (3)
------------- --------------
NET EARNINGS ......................................... 285,964 (5) 1,665,214
PREFERRED DIVIDENDS .................................. (7,188) ------
------------- --------------
NET EARNINGS APPLICABLE TO COMMON
SHAREHOLDERS ..................................... 278,776 $ 1,665,214
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING: 177,443 175,209
============= ==============
EARNINGS PER SHARE:
NET EARNINGS BEFORE EXTRAORDINARY GAIN (2) $ 1.57 (5) $ 1.64 (2)
EXTRAORDINARY GAIN (3) ------ 7.86 (3)
------------- --------------
NET EARNINGS PER SHARE COMMON SHAREHOLDER $ 1.57 (5) $ 9.50
============= ==============
</TABLE>
(1) Ratio of medical costs to premium revenue.
(2) Excluding nonrecurring, non-operating costs of $35.9 million ($22.3 million
after tax, or $0.13 per common share) associated with the May 1994 Ramsay
and Complete Health acquisitions, net earnings before extraordinary gain
for the year ended December 31, 1994 would have been $310.4 million, or
$1.77 per common share. All periods include the results of Ramsay and
Complete Health in accordance with pooling of interests accounting.
(3) On May 27, 1994, the Company completed the sale of its subsidiary
Diversified Pharmaceutical Services to SmithKline Beecham for $2.3 billion,
resulting in a net after tax gain of $1.38 billion or $7.85 EPS for the
quarter. Post disposition results of DPS are not included.
(4) Includes post acquisition date operating results of GenCare Health Systems,
Inc. acquired on January 3, 1995, Group Sales and Service of Puerto Rico,
Inc. acquired on February 28, 1995, and The MetraHealth Companies, Inc.
acquired on October 2, 1995.
(5) Excluding fourth quarter restructuring charges of $153.8 million ($96.9
million after tax, or $0.54 per common share) associated with the
MetraHealth acquisition, net earnings for the three and twelve month
periods ending December 31, 1995 would have been $109.9 million and $382.9
million, or $0.57 and $2.12 per common share.
<PAGE>
UNITED HEALTHCARE CORPORATION SCHEDULE B
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERLY TREND ANALYSIS
(Unaudited)
(000's)
<TABLE>
<CAPTION>
% CHG FROM
4TH QTR % 1ST QTR % 4TH QTR
1994 REVENUE 1995 (2) REVENUE 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES:
PREMIUM.................................. $ 877,317 90.5% $ 1,004,489 91.0% 14.5%
MANAGEMENT SERVICES AND FEES............. 55,822 5.8% 65,224 5.9% 16.8%
INVESTMENT INCOME........................ 35,888 3.7% 34,122 3.1% -4.9%
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES........................... 969,027 100.0% 1,103,835 100.0% 13.9%
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
MEDICAL COSTS (1) ....................... 685,613 78.1%(1) 783,501 78.0%(1) 14.3%
SELLING, GENERAL & ADMIN................. 130,653 13.5% 157,578 14.3% 20.6%
DEPRECIATION & AMORT..................... 15,540 1.6% 19,665 1.8% 26.5%
RESTRUCTURING CHARGES (3)................ ---- ---- ---- ---- ----
---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES................. 831,806 85.8% 960,744 87.0% 15.5%
---------- ---------- ---------- ---------- ----------
EARNINGS FROM OPERATIONS.................... 137,221 14.2% 143,091 13.0% 4.3%
INTEREST EXPENSE............................ (613) (180) -70.6%
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTERESTS........................ 136,608 142,911 4.6%
PROVISION FOR INCOME TAXES.................. (51,914) (52,878) 1.9%
MINORITY INTERESTS.......................... (451) (601) ----
---------- ---------- ----------
NET EARNINGS ............................... 84,243 89,432 6.2%
PREFERRED DIVIDENDS ........................ ---- ---- ----
---------- ---------- ----------
NET EARNINGS APPLICABLE TO COMMON
SHAREHOLDERS ........................... $ 84,243 $ 89,432 6.2%
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING: 176,573 176,403 -0.1%
========== ========== ==========
EARNINGS PER SHARE:
NET EARNINGS PER COMMON SHARE $ 0.48 $ 0.51
========== ==========
<CAPTION>
% CHG FROM % CHG FROM
2ND QTR % 1ST QTR 3RD QTR % 2ND
1995 (2) REVENUE 1995 1995 (2) REVENUE 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
PREMIUM................................... $ 1,048,773 90.6% 4.4% $ 1,100,013 90.5% 4.9%
MANAGEMENT SERVICES AND FEES.............. 68,749 5.9% 5.4% 76,367 6.3% 11.1%
INVESTMENT INCOME......................... 40,423 3.5% 18.5% 39,156 3.2% -3.1%
---------- ---------- ---------- ---------- ---------- ----------
TOTAL REVENUES............................ 1,157,945 100.0% 4.9% 1,215,536 100.0% 5.0%
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
MEDICAL COSTS (1) ........................ 824,161 78.6%(1) 5.2% 872,358 79.3%(1) 5.8%
SELLING, GENERAL & ADMIN.................. 169,519 14.6% 7.6% 173,267 14.3% 2.2%
DEPRECIATION & AMORT...................... 20,384 1.8% 3.7% 19,343 1.6% -5.1%
RESTRUCTURING CHARGES (3)................. ---- ---- ---- ---- ---- ----
---------- ---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES.................. 1,014,064 87.6% 5.5% 1,064,968 87.6% 5.0%
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS FROM OPERATIONS..................... 143,881 12.4% 0.6% 150,568 12.4% 4.6%
INTEREST EXPENSE............................. (378) 110.0% (146) -61.4%
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTERESTS......................... 143,503 0.4% 150,422 4.8%
PROVISION FOR INCOME TAXES................... (53,096) 0.4% (55,655) 4.8%
MINORITY INTERESTS........................... (528) ---- (1,097) ----
---------- ---------- ---------- ----------
NET EARNINGS ................................ 89,879 0.5% 93,670 4.2%
PREFERRED DIVIDENDS ......................... ---- ---- ---- ----
---------- ---------- ---------- ----------
NET EARNINGS APPLICABLE TO COMMON
SHAREHOLDERS ............................ $ 89,879 0.5% $ 93,670 4.2%
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING: 176,304 -0.1% 177,070 0.4%
========== ========== ========== ==========
EARNINGS PER SHARE:
NET EARNINGS PER COMMON SHARE $ 0.51 $ 0.53
========== ==========
<CAPTION>
% CHG FROM
4TH QTR % 3RD QTR
1995 (2) REVENUE 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
PREMIUM................................... $ 1,778,080 81.1% 61.6%
MANAGEMENT SERVICES AND FEES.............. 369,367 16.8% 383.7%
INVESTMENT INCOME......................... 46,115 2.1% 17.8%
---------- ---------- ----------
TOTAL REVENUES............................ 2,193,562 100.0% 80.5%
---------- ---------- ----------
OPERATING EXPENSES:
MEDICAL COSTS (1) ........................ 1,450,913 81.6%(1) 66.3%
SELLING, GENERAL & ADMIN.................. 530,542 24.2% 206.2%
DEPRECIATION & AMORT...................... 35,066 1.6% 81.3%
RESTRUCTURING CHARGES (3)................. 153,796 (3) ---- ----
---------- ---------- ----------
TOTAL OPERATING EXPENSES.................. 2,170,317 98.9% 103.8%
---------- ---------- ----------
EARNINGS FROM OPERATIONS..................... 23,245 1.1% -84.6%
INTEREST EXPENSE............................. (67) -54.1%
---------- ----------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTERESTS......................... 23,178 -84.6%
PROVISION FOR INCOME TAXES................... (8,576) -84.6%
MINORITY INTERESTS........................... (1,619) ----
---------- ----------
NET EARNINGS ................................ 12,983 (3) -86.1%
PREFERRED DIVIDENDS ......................... (7,188) ----
---------- ----------
NET EARNINGS APPLICABLE TO COMMON
SHAREHOLDERS ............................ $ 5,795 -93.8%
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING: 179,478 1.4%
========== ==========
EARNINGS PER SHARE:
NET EARNINGS PER COMMON SHARE $ 0.03 (3)
==========
</TABLE>
(1) Ratio of medical costs to premium revenue.
(2) Includes post acquisition date operating results of GenCare Health Systems,
Inc. acquired on January 3, 1995, Group Sales and Service of Puerto Rico,
Inc. acquired on February 28, 1995, and The MetraHealth Companies, Inc.
acquired on October 2, 1995.
(3) Excluding fourth quarter restructuring charges of $153.8 million ($96.9
million after tax, or $0.54 per common share) associated with the
MetraHealth acquisition, net earnings for the three month period ending
December 31, 1995 would have been $109.9 million, or $0.57 per common
share.
<PAGE>
<TABLE>
<CAPTION>
UNITED HEALTHCARE CORPORATION SCHEDULE C
BALANCE SHEETS
(Unaudited)
(000's)
SUMMARY BALANCE SHEET 12/31/93 12/31/94 (1) 03/31/95 (2) 06/30/95 09/30/95 12/31/95 (3)
___________________________ ----------- ------------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
CASH & SHORT-TERM INVESTMENTS $ 400,870 $ 1,654,336 $ 945,073 $ 1,031,172 $ 1,583,998 $ 1,803,925
OTHER CURRENT ASSETS 213,098 253,879 276,678 272,943 309,703 1,118,415
LONG-TERM INVESTMENTS 768,563 1,115,054 1,488,750 1,456,333 1,001,584 1,274,470
OTHER LONG-TERM ASSETS 404,823 466,210 990,330 995,538 1,001,586 2,019,395
----------- ---------- ---------- ----------- ---------- -----------
TOTAL ASSETS $ 1,787,354 $ 3,489,479 $ 3,700,831 $ 3,755,986 $ 3,896,871 $ 6,216,205
=========== ========== ========== =========== ========== ===========
MEDICAL SERVICES PAYABLE $ 459,201 $ 443,559 $ 479,027 $ 473,612 $ 500,450 $ 1,177,021
UNEARNED PREMIUMS 70,844 70,718 87,911 93,534 95,251 195,481
OTHER CURRENT LIABILITIES/INCOME TAXES
PAYABLE 128,689 134,025 199,186 136,517 140,448 1,114,565
TAXES PAYABLE - GAIN ON SALE OF SUBSIDIARY ------ 16,000 ------ ------ ------ ------
OTHER LONG-TERM LIABILITIES 39,099 24,275 25,142 20,545 26,189 33,300
=========== ========= ========== =========== ========== ==========
TOTAL LIABILITIES 697,833 688,577 791,266 724,208 762,338 2,520,367
MINORITY INTERESTS 4,111 5,446 5,846 6,374 7,021 7,818
5.75% CONVERTIBLE PREFERRED STOCK ------ ------ ------ ------ ------ 500,000
SHAREHOLDERS' EQUITY 1,085,410 2,795,456 2,903,719 3,025,404 3,127,512 3,188,020
----------- --------- ---------- ----------- ---------- ----------
TOTAL LIABILITIES & EQUITY $ 1,787,354 $ 3,489,479 $ 3,700,831 $ 3,755,986 $ 3,896,871 $ 6,216,205
=========== ========= ========== =========== ========== ==========
</TABLE>
Note: All periods presented include the results of Ramsay HMO Inc. and Complete
Health Services Inc. in accordance with pooling of interests accounting.
The Ramsay and Complete mergers occurred on May 31, 1994.
(1) On May 27, 1994, the Company completed the sale of its subsidiary
Diversified Pharmaceutical Services to SmithKline Beecham for $2.3 billion,
resulting in a net after tax gain of $1.38 billion or $7.86 EPS.
(2) GenCare Health Systems, Inc. (St. Louis) was acquired in January, 1995.
Group Sales and Service of Puerto Rico, Inc. was acquired in February,
1995.
(3) The MetraHealth Companies, Inc. were acquired in October, 1995.
