UnitedHealth stock sinks as Medicare disappoints

NEW YORK, March 17 (Reuters) - Shares of UnitedHealth Group Inc (UNH.N: Quote, Profile, Research) fell 8 percent on Monday after the largest U.S. health insurer by market value posted sluggish enrollment in its Medicare plans for the elderly, analysts said.

UnitedHealth shares were down $3.10 to $34.09 in afternoon trade on the New York Stock Exchange. The shares are off about 24 percent since rival WellPoint Inc (WLP.N: Quote, Profile, Research) cut its 2008 profit forecast last Monday, sparking a broad sell-off in health insurer stocks.

UnitedHealth, one of the largest Medicare plan providers, grew its monthly membership by about 4,000 members, according to March data from the U.S. government analyzed by several securities analysts.

That compared to nearly 21,000 additions by Humana Inc (HUM.N: Quote, Profile, Research), another Medicare player, said Stifel Nicolaus analyst Thomas Carroll.

"I think the expectations for United were a lot more than that," Carroll said. "That could be weighing on investors' minds, in concert with the general issues out there in the managed care world right now."

UBS analyst Justin Lake said UnitedHealth's Medicare growth "continues to look sluggish."

UnitedHealth may also have been hurt by Coventry Health Care Inc's (CVH.N: Quote, Profile, Research) reduction of its 2008 profit forecast on Monday, tied to high medical costs from the flu and lower than expected investment income.

WellPoint cited high medical costs, weak enrollment and a worsening economy in cutting its forecast last week. And Humana also cut its first quarter and 2008 outlook on Wednesday, blaming higher costs for one of its Medicare prescription plans.

Shares of smaller insurer Health Net Inc (HNT.N: Quote, Profile, Research) were also off 6.5 percent on Monday. Oppenheimer & Co analyst Carl McDonald said Health Net's Medicare membership was about 14,000 shy of his forecast. (Reporting by Lewis Krauskopf, editing by Leslie Gevirtz)