UnitedHealth Group Reports Second Quarter 2019 Results
- Total Revenues of
$60.6 Billion Grew 8% Year-Over-Year - Earnings from Operations Increased 13% to
$4.7 Billion - Net Earnings of
$3.42 Per Share Grew 15% Year-Over-Year - Adjusted Net Earnings of
$3.60 Per Share Grew 15% Year-Over-Year - Cash Flows from Operations were
$5.9 Billion in the Quarter
“Our results in the quarter reflect strong and balanced performance from both Optum and UnitedHealthcare and are driven by the 320,000 women and men of
Based on strong first half 2019 results and confidence in the remainder of the year, the Company increased its full year net earnings outlook to
Quarterly Financial Performance |
||||||
|
Three Months Ended |
|
||||
|
2019 |
2018 |
2019 |
|
|
|
Revenues |
|
|
|
|
|
|
Earnings from Operations |
|
|
|
|
|
|
|
5.4% |
5.2% |
5.7% |
|
|
- UnitedHealth Group’s second quarter 2019 revenues grew
$4.5 billion or 8.0 percent year-over-year to$60.6 billion , led by double-digit percentage revenue growth at UnitedHealthcare Medicare & Retirement,OptumRx andOptumHealth . - Second quarter earnings from operations grew 12.8 percent or
$540 million year-over-year to$4.7 billion . Adjusted net earnings of$3.60 per share advanced 14.6 percent. - Cash flows from operations were
$5.9 billion in the quarter and$9.1 billion or 1.3x net income year to date. - Second quarter medical cost trends remained well managed, with the revenue effect from the deferral of the health insurance tax driving the 120 basis point increase in the consolidated medical care ratio year-over-year to 83.1 percent. Favorable medical reserve development was
$270 million this quarter and days claims payable remained consistent at 49 days. - The second quarter operating cost ratio of 13.9 percent improved 110 basis points from the same period last year, reflecting the deferral of the health insurance tax and continued effects of productivity advances and operating cost management disciplines.
- Higher investment and other income was driven by higher interest yields and investment balances, earnings from well-performing minority investments and a
$100 million venture investment gain. - Second quarter dividend payments grew to
$1.0 billion as the annual dividend rate was increased 20 percent to$4.32 per share inJune 2019 . In the second quarter, 6.4 million shares were repurchased for$1.5 billion , bringing year-to-date purchases to 18.2 million shares for$4.5 billion . - Return on equity of 25.1 percent in the period continued to reflect the Company’s strong and diverse earnings profile and efficient capital base.
UnitedHealthcare provides global health care benefits, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to improving the value health care consumers receive by reducing the total cost of care, enhancing the quality of care received, improving health and wellness and simplifying the health care experience.
Quarterly Financial Performance |
||||||
|
Three Months Ended |
|
||||
|
2019 |
2018 |
2019 |
|
|
|
Revenues |
|
|
|
|
|
|
Earnings from Operations |
|
|
|
|
|
|
Operating Margin |
5.4% |
5.1% |
6.0% |
|
|
- UnitedHealthcare grew second quarter 2019 earnings from operations by 12.1 percent to
$2.6 billion driven by revenue growth and strong cost disciplines. The business grew to serve 705,000 more people with medical benefits over the past year, including a greater mix of people with higher acuity needs, helping grow revenues by$2.7 billion , or 6.0 percent, to$48.6 billion in the quarter.- UnitedHealthcare Employer & Individual revenues in second quarter 2019 increased
$324 million year-over-year to$14.0 billion , as UnitedHealthcare served 615,000 more people with commercial benefits in the past year. - UnitedHealthcare Medicare & Retirement second quarter 2019 revenues grew by
$2.0 billion or 10.6 percent to$20.9 billion . Medicare Advantage products grew to serve 400,000 more individual and employer-sponsored seniors year-over-year. Including those dually eligible for Medicare and Medicaid and served throughUnitedHealthcare Community & State , total year-over-year growth in Medicare Advantage was 540,000 people. -
UnitedHealthcare Community & State revenues grew$440 million or 4.1 percent to$11.2 billion in second quarter 2019, driven by growth in people served with higher acuity needs. Second quarter membership declined 350,000 people year-over-year primarily due to states adding more carriers and managing eligibility and proactive market withdrawals. -
UnitedHealthcare Global revenues in second quarter 2019 were stable year-over-year at
$2.5 billion .
- UnitedHealthcare Employer & Individual revenues in second quarter 2019 increased
Optum is a health services business serving the global health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using market-leading information, data analytics, technology and clinical insights, Optum helps improve overall health system performance: optimizing care quality, reducing health care costs and improving the consumer experience.
Quarterly Financial Performance |
||||||
|
Three Months Ended |
|
||||
|
2019 |
2018 |
2019 |
|
|
|
Revenues |
|
|
|
|
|
|
Earnings from Operations |
|
|
|
|
|
|
Operating Margin |
7.5% |
7.5% |
7.1% |
|
|
- Optum revenues of
$28.0 billion grew by 13.4 percent or$3.3 billion year-over-year in the second quarter of 2019. Optum’s second quarter 2019 earnings from operations advanced 13.8 percent to$2.1 billion due to strong revenue growth and stable, strong operating margin performance.-
OptumHealth revenues advanced$1.2 billion or 20.3 percent year-over-year to$7.1 billion in second quarter 2019, with strength and diversity of growth across care delivery, behavioral health services and complex care management.OptumHealth served approximately 95 million people atJune 30, 2019 , and the average revenue per consumer increased 17 percent year-over-year, driven by growth in value-based care arrangements and continued strong demand for OptumHealth’s expanding service and product offerings. -
OptumInsight revenues of$2.3 billion grew 7.0 percent year-over-year in the quarter, while revenue backlog grew over 20 percent year-over-year to$18.5 billion at quarter-end driven by health care operations and technology, revenue management, and payer and advisory services. -
OptumRx revenues in second quarter 2019 increased 11.7 percent or$2.0 billion year-over-year to$18.9 billion , reflecting market share gains and continued diversification of services provided, including a higher mix of specialty pharmacy care services.OptumRx fulfilled 343 million adjusted scripts in second quarter 2019, growing 3.3 percent over the prior year.
-
About
Earnings Conference Call
As previously announced,
Non-GAAP Financial Information
This news release presents non-GAAP financial information provided as a complement to the results provided in accordance with accounting principles generally accepted in
Forward-Looking Statements
The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements within the meaning of the PSLRA. These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors.
Some factors that could cause actual results to differ materially from results discussed or implied in the forward-looking statements include: our ability to effectively estimate, price for and manage our medical costs, including the impact of any new coverage requirements; new laws or regulations, or changes in existing laws or regulations, or their enforcement or application, including increases in medical, administrative, technology or other costs or decreases in enrollment resulting from
This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our other periodic and current filings with the
Earnings Release Schedules and Supplementary Information |
Quarter Ended |
- Condensed Consolidated Statements of Operations |
- Condensed Consolidated Balance Sheets |
- Condensed Consolidated Statements of Cash Flows |
- Supplemental Financial Information - Businesses |
- Supplemental Financial Information - Business Metrics |
- Reconciliation of Non-GAAP Financial Measure |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||||
Revenues | ||||||||||||||||
Premiums |
$ |
47,164 |
|
$ |
44,458 |
|
$ |
94,677 |
|
$ |
88,542 |
|
||||
Products |
|
8,353 |
|
|
7,004 |
|
|
16,425 |
|
|
13,706 |
|
||||
Services |
|
4,496 |
|
|
4,269 |
|
|
8,814 |
|
|
8,373 |
|
||||
Investment and other income |
|
582 |
|
|
355 |
|
|
987 |
|
|
653 |
|
||||
Total revenues |
|
60,595 |
|
|
56,086 |
|
|
120,903 |
|
|
111,274 |
|
||||
Operating costs | ||||||||||||||||
Medical costs |
|
39,184 |
|
|
36,427 |
|
|
78,123 |
|
|
72,290 |
|
||||
Operating costs |
|
8,415 |
|
|
8,386 |
|
|
16,932 |
|
|
16,892 |
|
||||
Cost of products sold |
|
7,598 |
|
|
6,471 |
|
|
14,979 |
|
|
12,655 |
|
||||
Depreciation and amortization |
|
654 |
|
|
598 |
|
|
1,293 |
|
|
1,180 |
|
||||
Total operating costs |
|
55,851 |
|
|
51,882 |
|
|
111,327 |
|
|
103,017 |
|
||||
Earnings from operations |
|
4,744 |
|
|
4,204 |
|
|
9,576 |
|
|
8,257 |
|
||||
Interest expense |
|
(418 |
) |
|
(344 |
) |
|
(818 |
) |
|
(673 |
) |
||||
Earnings before income taxes |
|
4,326 |
|
|
3,860 |
|
|
8,758 |
|
|
7,584 |
|
||||
Provision for income taxes |
|
(941 |
) |
|
(850 |
) |
|
(1,816 |
) |
|
(1,650 |
) |
||||
Net earnings |
|
3,385 |
|
|
3,010 |
|
|
6,942 |
|
|
5,934 |
|
||||
Earnings attributable to noncontrolling interests |
|
(92 |
) |
|
(88 |
) |
|
(182 |
) |
|
(176 |
) |
||||
Net earnings attributable to |
$ |
3,293 |
|
$ |
2,922 |
|
$ |
6,760 |
|
$ |
5,758 |
|
||||
Diluted earnings per share attributable to |
$ |
3.42 |
|
$ |
2.98 |
|
$ |
6.97 |
|
$ |
5.85 |
|
||||
Adjusted earnings per share attributable to |
$ |
3.60 |
|
$ |
3.14 |
|
$ |
7.33 |
|
$ |
6.19 |
|
||||
Diluted weighted-average common shares outstanding |
|
964 |
|
|
982 |
|
|
970 |
|
|
984 |
|
(a) |
See page 6 for a reconciliation of the non-GAAP measure |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(in millions) | |||||
(unaudited) | |||||
|
|
|
|||
2019 |
|
2018 |
|||
Assets | |||||
Cash and short-term investments |
$ |
17,269 |
$ |
14,324 |
|
Accounts receivable, net |
|
9,741 |
|
11,388 |
|
Other current assets |
|
15,028 |
|
12,980 |
|
Total current assets |
|
42,038 |
|
38,692 |
|
Long-term investments |
|
35,696 |
|
32,510 |
|
Other long-term assets |
|
89,466 |
|
81,019 |
|
Total assets |
$ |
167,200 |
$ |
152,221 |
|
Liabilities, redeemable noncontrolling interests and equity | |||||
Medical costs payable |
$ |
20,907 |
$ |
19,891 |
|
Commercial paper and current maturities of long-term debt |
|
7,800 |
|
1,973 |
|
Other current liabilities |
|
33,621 |
|
31,345 |
|
Total current liabilities |
|
62,328 |
|
53,209 |
|
Long-term debt, less current maturities |
|
34,473 |
|
34,581 |
|
Other long-term liabilities |
|
12,343 |
|
8,204 |
|
Redeemable noncontrolling interests |
|
2,202 |
|
1,908 |
|
Equity |
|
55,854 |
|
54,319 |
|
Total liabilities, redeemable noncontrolling interests and equity |
$ |
167,200 |
$ |
152,221 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in millions) | |||||||
(unaudited) | |||||||
Six Months Ended |
|||||||
2019 |
2018 |
||||||
Operating Activities | |||||||
Net earnings |
$ |
6,942 |
|
$ |
5,934 |
|
|
Noncash items: | |||||||
Depreciation and amortization |
|
1,293 |
|
|
1,180 |
|
|
Deferred income taxes and other |
|
68 |
|
|
(148 |
) |
|
Share-based compensation |
|
398 |
|
|
358 |
|
|
Net changes in operating assets and liabilities |
|
407 |
|
|
5,052 |
|
|
Cash flows from operating activities |
|
9,108 |
|
|
12,376 |
|
|
Investing Activities | |||||||
Purchases of investments, net of sales and maturities |
|
(1,654 |
) |
|
(2,968 |
) |
|
Purchases of property, equipment and capitalized software |
|
(977 |
) |
|
(960 |
) |
|
Cash paid for acquisitions, net |
|
(4,751 |
) |
|
(2,636 |
) |
|
Other, net |
|
504 |
|
|
(134 |
) |
|
Cash flows used for investing activities |
|
(6,878 |
) |
|
(6,698 |
) |
|
Financing Activities | |||||||
Common share repurchases |
|
(4,501 |
) |
|
(3,150 |
) |
|
Dividends paid |
|
(1,884 |
) |
|
(1,588 |
) |
|
Net change in commercial paper and long-term debt |
|
5,674 |
|
|
2,683 |
|
|
Other, net |
|
1,354 |
|
|
2,842 |
|
|
Cash flows from financing activities |
|
643 |
|
|
787 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
6 |
|
|
(78 |
) |
|
Increase in cash and cash equivalents |
|
2,879 |
|
|
6,387 |
|
|
Cash and cash equivalents, beginning of period |
|
10,866 |
|
|
11,981 |
|
|
Cash and cash equivalents, end of period |
$ |
13,745 |
|
$ |
18,368 |
|
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES | |||||||||||||||
(in millions, except percentages) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Revenues | |||||||||||||||
UnitedHealthcare |
$ |
48,594 |
|
$ |
45,846 |
|
$ |
97,490 |
|
$ |
91,305 |
|
|||
Optum |
|
28,029 |
|
|
24,726 |
|
|
54,389 |
|
|
48,327 |
|
|||
Eliminations |
|
(16,028 |
) |
|
(14,486 |
) |
|
(30,976 |
) |
|
(28,358 |
) |
|||
Total consolidated revenues |
$ |
60,595 |
|
$ |
56,086 |
|
$ |
120,903 |
|
$ |
111,274 |
|
|||
Earnings from Operations | |||||||||||||||
UnitedHealthcare |
$ |
2,642 |
|
$ |
2,357 |
|
$ |
5,596 |
|
$ |
4,757 |
|
|||
Optum (a) |
|
2,102 |
|
|
1,847 |
|
|
3,980 |
|
|
3,500 |
|
|||
Total consolidated earnings from operations |
$ |
4,744 |
|
$ |
4,204 |
|
$ |
9,576 |
|
$ |
8,257 |
|
|||
Operating Margin | |||||||||||||||
UnitedHealthcare |
|
5.4 |
% |
|
5.1 |
% |
|
5.7 |
% |
|
5.2 |
% |
|||
Optum |
|
7.5 |
% |
|
7.5 |
% |
|
7.3 |
% |
|
7.2 |
% |
|||
Consolidated operating margin |
|
7.8 |
% |
|
7.5 |
% |
|
7.9 |
% |
|
7.4 |
% |
|||
Revenues | |||||||||||||||
UnitedHealthcare Employer & Individual |
$ |
14,032 |
|
$ |
13,708 |
|
$ |
28,116 |
|
$ |
27,122 |
|
|||
UnitedHealthcare Medicare & Retirement |
|
20,855 |
|
|
18,859 |
|
|
41,951 |
|
|
37,784 |
|
|||
|
11,186 |
|
|
10,746 |
|
|
22,368 |
|
|
21,417 |
|
||||
UnitedHealthcare Global |
|
2,521 |
|
|
2,533 |
|
|
5,055 |
|
|
4,982 |
|
|||
$ |
7,148 |
|
$ |
5,941 |
|
$ |
13,861 |
|
$ |
11,700 |
|
||||
|
2,339 |
|
|
2,185 |
|
|
4,528 |
|
|
4,254 |
|
||||
|
18,923 |
|
|
16,941 |
|
|
36,740 |
|
|
33,047 |
|
||||
Optum eliminations |
|
(381 |
) |
|
(341 |
) |
|
(740 |
) |
|
(674 |
) |
(a) |
Earnings from operations for Optum for the three and six months ended |
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS | ||||||||||||
UNITEDHEALTHCARE CUSTOMER PROFILE | ||||||||||||
(in thousands) | ||||||||||||
People Served | 2019 |
2019 |
2018 |
2018 |
||||||||
Commercial: | ||||||||||||
Risk-based |
|
8,325 |
|
8,340 |
|
8,495 |
|
8,385 |
||||
Fee-based |
|
19,090 |
|
19,175 |
|
18,420 |
|
18,415 |
||||
Total Commercial |
|
27,415 |
|
27,515 |
|
26,915 |
|
26,800 |
||||
Medicare Advantage |
|
5,190 |
|
5,165 |
|
4,945 |
|
4,790 |
||||
Medicaid |
|
6,360 |
|
6,425 |
|
6,450 |
|
6,710 |
||||
Medicare Supplement (Standardized) |
|
4,495 |
|
4,500 |
|
4,545 |
|
4,505 |
||||
Total Public and Senior |
|
16,045 |
|
16,090 |
|
15,940 |
|
16,005 |
||||
Total UnitedHealthcare - Domestic Medical |
|
43,460 |
|
43,605 |
|
42,855 |
|
42,805 |
||||
International |
|
6,070 |
|
6,125 |
|
6,220 |
|
6,020 |
||||
Total UnitedHealthcare - Medical |
|
49,530 |
|
49,730 |
|
49,075 |
|
48,825 |
||||
Supplemental Data | ||||||||||||
Medicare Part D stand-alone |
|
4,430 |
|
4,480 |
|
4,710 |
|
4,730 |
||||
OPTUM PERFORMANCE METRICS | ||||||||||||
2019 |
2019 |
2018 |
2018 |
|||||||||
OptumHealth Consumers Served (in millions) |
|
95 |
|
93 |
|
93 |
|
92 |
||||
OptumInsight Contract Backlog (in billions) |
$ |
18.5 |
$ |
17.4 |
$ |
17.0 |
$ |
15.4 |
||||
OptumRx Quarterly Adjusted Scripts (in millions) |
|
343 |
|
339 |
|
348 |
|
332 |
Note: |
Reconciliation of Non-GAAP Financial Measure | ||||||||||||
- Adjusted Net Earnings per Share | ||||||||||||
Use of Non-GAAP Financial Measures | ||||||||||||
Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. Adjusted net earnings per share excludes from the relevant GAAP metric, as applicable, intangible amortization and other items, if any, that do not relate to the Company's underlying business performance. Management believes that the use of adjusted net earnings per share provides investors and management useful information about the earnings impact of acquisition-related intangible asset amortization. Management believes the exclusion of these items provides a more useful comparison of the Company's underlying business performance from period to period. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
ADJUSTED NET EARNINGS PER SHARE | ||||||||||||||||||
Three Months Ended |
Six Months Ended |
Projected Year Ended |
||||||||||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
||||||||||
GAAP net earnings attributable to |
$ |
3,293 |
|
$ |
2,922 |
|
$ |
6,760 |
|
$ |
5,758 |
|
||||||
Intangible amortization |
|
240 |
|
|
220 |
|
|
467 |
|
|
440 |
|
~960 | |||||
Tax effect of intangible amortization |
|
(60 |
) |
|
(56 |
) |
|
(116 |
) |
|
(111 |
) |
~(240) | |||||
Adjusted net earnings attributable to |
$ |
3,473 |
|
$ |
3,086 |
|
$ |
7,111 |
|
$ |
6,087 |
|
||||||
GAAP diluted earnings per share |
$ |
3.42 |
|
$ |
2.98 |
|
$ |
6.97 |
|
$ |
5.85 |
|
||||||
Intangible amortization per share |
|
0.24 |
|
|
0.22 |
|
|
0.48 |
|
|
0.45 |
|
~1.00 | |||||
Tax effect per share of intangible amortization |
|
(0.06 |
) |
|
(0.06 |
) |
|
(0.12 |
) |
|
(0.11 |
) |
~(0.25) | |||||
Adjusted diluted earnings per share |
$ |
3.60 |
|
$ |
3.14 |
|
$ |
7.33 |
|
$ |
6.19 |
|
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