Filed at 8:19 a.m. ET

MINNEAPOLIS (AP) -- Insurer UnitedHealth said first-quarter profits rose 7 percent, missing Wall Street expectations, and it slashed its full-year profit outlook in part because of a drop-off in corporate customers.

Its shares dropped 8 percent to $34.75 in premarket trading.

''These financial results are not acceptable for a company with our capabilities and potential,'' said President and Chief Executive Stephen J. Hemsley in a prepared statement.

Minnetonka, Minn.-based UnitedHealth Group Inc. said on Tuesday it earned $994 million, or 78 cents per share, up from $927 million, or 66 cents per share, during the same period last year. Revenue rose 7 percent to $20.30 billion from $19.05 billion.

Analysts surveyed by Thomson Financial expected a higher profit of 80 cents per share, though revenue topped the average estimate of $19.88 billion after it booked $53 million in capital gains as it repositions its investment portfolio.

The company lowered its 2008 profit outlook by 40 cents per share to a range of $3.55 to $3.60, citing ''unusually high'' costs related to the flu season, reduced investment income, and projected membership declines. Revenue is expected to be between $81 billion and $82 billion.

Hemsley said UnitedHealth would adjust and ''strengthen organic growth and address operating costs, to deliver financial performance.''

UnitedHealth manages insurance programs for self-insured employers, and for others it provides the insurance coverage, too. UnitedHealth said it believes a decline among those customers was the result of high premiums in 2006 and 2007.

UnitedHealth cut its expectations for that group for the rest of the year because of greater-than-expected market response to its pricing, and said it expects to lose about 700,000 insured people this year, not counting growth from acquisitions.

It said it expects flat membership in programs for self-insured employers.

UnitedHealth said it spent about 82.4 percent of each premium dollar on health care during the quarter, down from 82.7 percent a year ago. It said better ratios in its Medicaid and Medicare Advantage businesses were offset by higher spending for the Medicare prescription drug benefit and an increase in spending on its commercial customers.

The company said it expects to spend about 81.3 percent of premium dollars on health care this year, plus or minus a half percentage point. That's up from 80.6 percent last year.

Enrollment in UnitedHealth's Medicare prescription drug insurance dropped by 390,000 people to 5.5 million. UnitedHealth was underbid on the prescription drug program and the government reassigned about 650,000 low-income seniors to the lower-priced plans.