Minnetonka-based UnitedHealth Group reported a slightly smaller profit for the first quarter as investment income fell and enrollment declined, but the results still exceeded analyst expectations.

Nevertheless, Chief Executive Stephen Hemsley warned that the nation's biggest health insurer is likely to be hurt further this year as employers who offer health coverage continue to cut workers in a bad economy.

"We continue to be appropriately circumspect about the economic environment and the impact it may have on our businesses," Hemsley said in a call with analysts early Tuesday.

UnitedHealth stock fell $1.41, or 5.8 percent, to close at $22.80.

The company said investment and other income fell 43 percent to $158 million because of the volatile financial markets.

Earnings fell to $984 million from $994 million in the first quarter of last year. However, because the company has been buying back shares, earnings per share rose to 81 cents from 78 cents.

Revenue rose 8.4 percent to $22 billion, from $20.3 billion, because of growth in senior coverage and government plans and acquisitions.

The share of premiums paid out to cover medical claims stayed flat at 82.4 percent.

The results "were a lot better than expected," said Sheryl Skolnick, an analyst with CRT Capital in Stamford, Conn. "There didn't seem to be anything in there that raised eyebrows. "

Analysts were expecting earnings of 68 cents per share on revenue of $21.37 billion.

Looking ahead

Still, the market focused on worries that the good performance would not carry over into the next quarter.

In the first quarter, UnitedHealth benefited from a mild flu season, which lowered medical costs. Rising unemployment is another worry. UnitedHealth forecasts it will lose a total of 1.5 million members this year as employers shed workers with health coverage.

The Obama administration has said it will temporarily subsidize so-called COBRA premiums for those who've been laid off. That would benefit UnitedHealth and other insurers because it keeps workers insured longer. But it may also prompt people to cram in medical procedures before their insurance runs out, cutting into margins for the insurers.

With all the uncertainties ahead, Hemsley said it would be "premature" to change the company's outlook for full-year earnings of $2.90 to $3.15 per share.

Chen May Yee •612-673-7434