United Healthcare 2007 Annual Report Download - page 30

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Cost of Products Sold
Cost of products sold in 2006 totaled $599 million, an increase of $510 million over 2005. This increase was
primarily due to increased pharmacy sales at Prescription Solutions, which was acquired in December 2005 with
the purchase of PacifiCare.
Depreciation and Amortization
Depreciation and amortization in 2006 was $670 million, an increase of $217 million, or 48%, over 2005.
Approximately $85 million of this increase was related to intangible assets from PacifiCare and other businesses
acquired since the beginning of 2005. The remaining increase was primarily due to additional depreciation and
amortization from higher levels of computer equipment and capitalized software as a result of technology
enhancements, business growth and businesses acquired since the beginning of 2005.
Income Taxes
Our effective income tax rate was 36.3% in 2006 and in 2005.
Business Segments
The following summarizes the operating results of our business segments for the years ended December 31:
(in millions) 2006 2005
Percent
Change
Revenues
Health Care Services ........................................ $ 67,817 $ 44,119 54%
OptumHealth .............................................. 4,342 3,127 39%
Ingenix ................................................... 956 796 20%
Prescription Solutions ....................................... 4,084 78 nm
Eliminations .............................................. (5,657) (1,695) nm
Consolidated Revenues .................................. $ 71,542 $ 46,425 54%
Earnings from Operations
Health Care Services ........................................ $ 5,860 $ 4,376 34%
OptumHealth .............................................. 809 574 41%
Ingenix ................................................... 176 130 35%
Prescription Solutions ....................................... 139 — nm
Consolidated Earnings From Operations .................... $ 6,984 $ 5,080 37%
nm - not meaningful
Health Care Services
Health Care Services had revenues of $67.8 billion in 2006, representing an increase of $23.7 billion, or 54%,
over 2005. Excluding the impact of businesses acquired since the beginning of 2005, Health Care Services
revenues increased by approximately $8.6 billion, or 20%, over 2005. Commercial Markets revenues of $39.5
billion in 2006 increased by $8.1 billion, or 26%, over 2005. Excluding the impact of businesses acquired since
the beginning of 2005, Commercial Markets revenues increased by approximately 2% over 2005. This was
primarily due to an 8% increase in the number of individuals served with commercial fee-based products and
annual service fee rate increases for self-insured customers, as well as average premium rate increases of
approximately 8% or above on UnitedHealthcare’s renewing risk-based products, partially offset by lower
premium yields from a larger portion of new customer sales generated from high-deductible lower-premium
28