UnitedHealth Group Inc. delayed filing its third-quarter financial report with U.S. regulators while the company, the largest U.S. health insurer, sorts out the costs of restating stock option grants.
The costs will be "significantly greater" than the $286 million estimated in May, UnitedHealth said Monday in a notice with the Securities and Exchange Commission confirming a statement the company made on Nov. 8. UnitedHealth, based in Minnetonka, Minn., previously missed an August filing for the second quarter.
UnitedHealth shares rose 64 cents, to $46.75.
UnitedHealth said in August, after the second-quarter delay, that it had received a default notice alleging a violation of the company's agreement with debt holders. The same bondholders later notified the company that they were seeking repayment of an $850-million issue of notes that were to come due in March 2036, according to a Nov. 3 UnitedHealth filing.
The company filed a lawsuit in federal court in Minnesota on Oct. 25 to avoid defaulting on its debt as a result of the financial reporting delays. The complaint, filed against defendants including Bank of New York, seeks a ruling that UnitedHealth is "not at default under its indenture," according to a Nov. 3 filing.
UnitedHealth last week said it would reduce the value of stock options awarded to two top executives in addition to delaying the submission of a quarterly report. UnitedHealth in October arranged a $7.5-billion line of credit with banks in case bondholders force repayment of debts. The company has just under $7 billion in bond debt, according to data compiled by Bloomberg on Nov. 3. Some of the debt needn't be repaid until 2036 unless a default occurs.
Under covenants that protect creditors, bondholders have the right to demand immediate repayment of bonds if a company violates the terms of borrowing agreements.
Spokesmen for UnitedHealth and Bank of New York didn't return calls for comment.
At least 176 companies have disclosed probes into backdated options in a broadening U.S. scandal, including 73 companies that said they must restate previously reported financial results.
Also on Monday:
* Drug makers Medarex Inc., based in Princeton, N.J., and Valeant Pharmaceuticals International of Costa Mesa also notified the SEC they were delaying quarterly filings to restate finances related to options. Valeant shares rose 11 cents to $16.73. Medarex added 26 cents to $13.25.
* Cnet Networks Inc., an online publisher of technology news and reviews, said it would also miss its filing deadline to report third-quarter earnings because of a stock option probe. The company will file the earnings report "as soon as practicable" after restating past results to account for misdated options, San Francisco-based Cnet said.
Cnet shares slipped 1 cent to $8.54.
* Rambus Inc., a designer of computer memory chips, said it would miss an extended filing deadline to report third-quarter earnings because an investigation into options was continuing. Rambus said Oct. 19 that it would restate results to account for at least $200 million in additional stock-based compensation costs. The Los Altos, Calif.-based company's former chief executive, Geoff Tate, resigned as a director on Aug. 15 because as CEO, he alone made the option grants that are now the subject of the investigation. Tate was CEO from 1990 to 2005.
Rambus added 10 cents, to $16.49.
* Orbital Sciences Corp., a maker of booster rockets for the U.S. missile-defense program, said it would miss the deadline for filing its quarterly report as it completed an internal review of some misdated stock options.
The Dulles, Va.-based company said in a regulatory filing that it expected to file its third-quarter report with the Securities and Exchange Commission by today. Orbital said Oct. 27 that it had begun a voluntary review of its stock-based compensation and that some financial statements would be revised. The results reported on that date didn't take into account the noncash adjustments expected to be recorded in connection with the completion of the review, which found no fraud or intentional misconduct, its filing said.
Orbital shares gained 23 cents, to $18.41.
* CEC Entertainment Inc., the operator of Chuck E. Cheese restaurants, said it would record expenses of as much as $30 million to properly account for past stock option grants dating back to 1989.
The Irving, Texas-based company, which will restate a number of past financial documents, said it did not yet know when it would file second- and third-quarter earnings results with federal regulators.
CEC shares fell 21 cents, to $39.30.