United Healthcare 2002 Annual Report Download - page 27

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UnitedHealth Group
Specialized Care Services
Specialized Care Services is a portfolio of health and well-being businesses, each serving a specialized
market need with a unique blend of benefits, networks, services and resources. Specialized Care Services
had revenues of $1.5 billion in 2002, an increase of $255 million, or 20%, over 2001. This increase was
principally driven by $140 million of revenue growth from Spectera, its vision care benefits business
acquired in October 2001, and an increase in the number of individuals served by United Behavioral
Health, its mental health benefits business, and Dental Benefit Providers, its dental services business.
Earnings from operations reached $286 million in 2002, an increase over 2001 of $72 million, or 34%, on
a reported basis and $66 million, or 30%, on a FAS No. 142 comparable reporting basis. Specialized Care
Services’ operating margin increased to 19.0% in 2002, up from 17.1% on a reported basis and from 17.5%
on a FAS No. 142 comparable reporting basis in 2001. This increase was driven by operational and productivity
improvements, partially offset by a shifting business mix toward higher revenue, lower margin products. With
the continuing growth of this segment, we have begun consolidating production and service operations to a
segment-wide service and production infrastructure to improve service quality and consistency and enhance
productivity and efficiency.
Ingenix
Ingenix is an international leader in the field of health care data analysis and application, serving
pharmaceutical companies, health insurers and other payers, health care providers, large employers and
governments. Revenues were $491 million in 2002, an increase of $44 million, or 10%, over 2001. This
was the result of strong new business growth in the health information business and revenues from
acquired businesses, partially offset by reduced revenues in the pharmaceutical services business.
Earnings from operations were $55 million, up $7 million, or 15%, over 2001 on a reported basis, and down
$14 million, or 20%, from 2001 on a FAS No. 142 comparable reporting basis. Operating margin was 11.2% in
2002, up from 10.7% in 2001 on a reported basis, and down from 15.4% on a FAS No. 142 comparable reporting
basis. The reduction in earnings from operations and operating margin on a FAS No. 142 comparable
reporting basis was due to cancellations and delays of certain clinical research trials by pharmaceutical clients,
which have been affected by weak industry-specific conditions. This reduction was partially offset by strong
business growth and slightly expanding margins in the health information business.
Corporate
Corporate includes costs for certain company-wide process improvement initiatives, net expenses from
charitable contributions to the United Health Foundation and eliminations of intersegment transactions.
The decrease in corporate expenses of $14 million from 2001 to 2002 reflects the completion during 2001
of certain company-wide process improvement initiatives.