- First Quarter Revenues of $55.2
Billion Grew 13.3% Year-Over-Year
- Earnings from Operations Increased
18.8% to $4.1 Billion, with Every Business Reporting Double-Digit
Percentage Earnings Growth
- Cash Flows from Operations were $8.4
Billion in First Quarter; Adjusted Cash Flows from Operations were
$3.2 Billion
- First Quarter Net Earnings of $2.87
Per Share Grew 28.7% Year-Over-Year
- First Quarter Adjusted Net Earnings
of $3.04 Per Share Grew 28.3% Year-Over-Year
UnitedHealth Group (NYSE: UNH) reported first quarter results,
led by continued strong, broad-based performance across the
enterprise.
“Through the intense focus our 285,000 colleagues bring to
helping people live healthier lives and helping make the health
system work better for everyone, we have grown to serve more people
in more ways than ever, including through innovative uses of
advanced technologies, data analytics, and modern clinical
approaches that improve quality, lower cost and advance consumer
and care provider satisfaction,” said David S. Wichmann, chief
executive officer of UnitedHealth Group.
Based on first quarter results and the business
outlook for the balance of the year, UnitedHealth Group has
increased its outlook for 2018 net earnings to a range of $11.70 to
$11.95 per share and adjusted net earnings of $12.40 to $12.65 per
share.
UnitedHealth Group
Quarterly Financial Performance
Three Months
Ended
March 31, March 31, December 31,
2018
2017
2017
Revenues $55.2 billion $48.7 billion $52.1 billion Earnings From
Operations $4.1 billion $3.4 billion $4.0 billion Net Margin
5.1% 4.5%
6.9%1
- UnitedHealth Group’s first quarter 2018
revenues grew 13.3 percent or $6.5 billion year-over-year to $55.2
billion.
- First quarter earnings from operations
grew $640 million or 18.8 percent year-over-year to $4.1 billion.
Adjusted net earnings of $3.04 per share grew 28.3 percent.
- Adjusted cash flows from operations of
$3.2 billion were 1.1x net income in first quarter 2018, compared
to $2.0 billion and 0.9x net income in first quarter 2017.
- The revenue effect from the return of
the health insurance tax in first quarter 2018 was the primary
driver of the 100 basis point year-over-year decrease in the
consolidated medical care ratio to 81.4 percent. Medical cost
reserves developed favorably by $290 million in first quarter
2018.
- The operating cost ratio of 15.4
percent in the first quarter of 2018 increased 100 basis points
year-over-year in response to the return of the health insurance
tax.
- The first quarter 2018 income tax rate
of 21.5 percent reflected the reduced federal statutory rate and
seasonally higher stock-based compensation activity, partially
offset by the return of the nondeductible health insurance
tax.
- First quarter 2018 days claims payable
of 49 days were essentially flat sequentially and year-over-year;
first quarter days sales outstanding rose two days sequentially and
one day year-over-year to 19 days, due to the addition of Empresas
Banmédica and growth in government-based offerings.
- UnitedHealth Group repurchased 11.6
million shares for $2.65 billion in the first quarter and paid $722
million in dividends to shareholders, an increase of 21.1 percent
over first quarter 2017.
- Annualized return on shareholders’
equity increased 210 basis points year-over-year to 23.8 percent in
the first quarter. Debt to total capital of 41.6 percent at March
31, 2018 decreased 190 basis points year-over-year, while
increasing 270 basis points sequentially due principally to the
Empresas Banmédica merger.
____________________
1 Fourth quarter 2017 included a $1.2 billion favorable non-cash
revaluation of the Company’s U.S. net deferred tax liability,
increasing net margin by 230 basis points in that quarter.
UnitedHealthcare
UnitedHealthcare provides global health care
benefits, serving individuals and employers, and Medicare and
Medicaid beneficiaries.
Quarterly Financial Performance
Three Months
Ended
March 31, March 31, December 31,
2018
2017
2017
Revenues $45.5 billion $40.1 billion $41.6 billion Earnings From
Operations $2.4 billion $2.1 billion $1.8 billion Operating Margin
5.3% 5.3% 4.2%
- UnitedHealthcare grew to serve 2.2
million more consumers2 in the first quarter of 2018, helping grow
revenues by $5.3 billion or 13.3 percent year-over-year to $45.5
billion. First quarter 2018 earnings from operations of $2.4
billion grew 12.5 percent.
- UnitedHealthcare
Employer & Individual first quarter 2018 revenues of
$13.4 billion increased $675 million year-over-year, due to growth
in people served over the past 12 months, increases in rates to
cover expected medical cost trends and the resumption of the health
insurance tax. As expected, UnitedHealthcare Employer &
Individual served 195,000 fewer people in commercial group plans in
the quarter, reflecting employers shifting their retirees from
self-funded offerings to group Medicare Advantage plans, and lower
retention due to pricing actions to cover the full cost of the
health insurance tax.
- UnitedHealthcare
Medicare & Retirement grew revenues by $2.4 billion or
14.3 percent year-over-year to $18.9 billion in the first quarter
of 2018. The business served 375,000 more seniors in the quarter,
including 330,000 in Medicare Advantage through individual products
and employer-sponsored group retiree plans. The number of people
served through Medicare Advantage grew 10.6 percent
year-over-year.
- In first quarter 2018, UnitedHealthcare Community & State revenues of
$10.7 billion grew $1.7 billion or 19.2 percent year-over-year,
reflecting strong 12-month membership growth and an increasing mix
of individuals with higher clinical needs. First quarter membership
was consistent with year end 2017, as strong growth serving people
in continuing markets offset the Delaware market withdrawal.
- UnitedHealthcare
Global served 6.1 million people at March 31, 2018, having
broadened its platform to serve people in Chile, Colombia and Peru
through a merger with Empresas Banmédica, a leading health plan and
care delivery organization serving more than 2 million people with
health care benefits. Global revenues of $2.45 billion grew 29.2
percent year-over-year.
____________________
2 Reflects net consumer growth excluding the TRICARE military
health program, which concluded in 2017.
Optum
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’s people help improve overall health
system performance: optimizing care quality, reducing health care
costs and improving the consumer experience and health system
performance.
Quarterly Financial Performance
Three Months
Ended
March 31, March 31, December 31,
2018
2017
2017
Revenues $23.6 billion $21.2 billion $24.4 billion Earnings From
Operations $1.7 billion $1.3 billion $2.2 billion Operating Margin
7.0% 6.0% 9.1%
- In the first quarter of 2018, Optum
revenues grew year-over-year by $2.4 billion or 11.1 percent to
$23.6 billion. Optum’s operating margin of 7 percent increased 100
basis points year-over-year in total, with performance improvements
at each business. First quarter earnings from operations grew $374
million or 29.2 percent year-over-year to $1.7 billion, with
double-digit percentage increases for every business segment.
- OptumHealth revenues of $5.8 billion grew $1
billion or 21.7 percent year-over-year, driven by growth in care
delivery and behavioral, digital consumer engagement and health
financial services. OptumHealth served 91 million people at quarter
end, having grown by 9 million people3 or 11 percent over the past
year.
- OptumInsight revenues grew 12.3 percent to $2.1
billion in first quarter 2018, driven by growth and expansion in
payer technology and services and care provider advisory services.
OptumInsight’s contract backlog of $15.2 billion grew
year-over-year by $2.1 billion or 16 percent.
- OptumRx
first quarter 2018 revenues grew 7.8 percent year-over-year to
$16.1 billion. OptumRx fulfilled 332 million adjusted scripts in
first quarter 2018, growing 3.1 percent over the prior year, with
favorable mix in specialty pharmacy and home delivery
services.
____________________
3 Reflects net consumer growth excluding the TRICARE military
health program, which concluded in 2017.
About UnitedHealth Group
UnitedHealth Group (NYSE: UNH) is a diversified health and
well-being company dedicated to helping people live healthier lives
and helping make the health system work better for everyone.
UnitedHealth Group offers a broad spectrum of products and services
through two distinct platforms: UnitedHealthcare, which provides
health care coverage and benefits services; and Optum, which
provides information and technology-enabled health services. For
more information, visit UnitedHealth Group at
www.unitedhealthgroup.com or follow @UnitedHealthGrp on
Twitter.
Earnings Conference Call
As previously announced, UnitedHealth Group will discuss the
Company’s results, strategy and future outlook on a conference call
with investors at 8:45 a.m. Eastern Time today. UnitedHealth Group
will host a live webcast of this conference call from the Investors
page of the Company’s website (www.unitedhealthgroup.com).
Following the call, a webcast replay will be available on the same
site through May 1, 2018. The conference call replay can also be
accessed by dialing 1-800-753-8878. This earnings release and the
Form 8-K dated April 17, 2018 can also be accessed from the
Investors page of the Company’s website.
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 the United States of
America (“GAAP”). A reconciliation of the non-GAAP financial
information to the most directly comparable GAAP financial measure
is provided in the accompanying tables found at the end of this
release.
Forward-Looking
Statements
The statements, estimates, projections, guidance or outlook
contained in this document include “forward-looking” statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 (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 U.S., Brazilian and
other jurisdictions’ regulations affecting the health care
industry; the outcome of the Department of Justice’s legal actions
relating to risk adjustment submission matters; our ability to
maintain and achieve improvement in CMS star ratings and other
quality scores that impact revenue; reductions in revenue or delays
to cash flows received under Medicare, Medicaid and other
government programs, including the effects of a prolonged U.S.
government shutdown or debt ceiling constraints; changes in
Medicare, including changes in payment methodology, the CMS star
ratings program or the application of risk adjustment data
validation audits; cyber-attacks or other privacy or data security
incidents; failure to comply with privacy and data security
regulations; regulatory and other risks and uncertainties of the
pharmacy benefits management industry; competitive pressures, which
could affect our ability to maintain or increase our market share;
changes in or challenges to our public sector contract awards; our
ability to execute contracts on competitive terms with physicians,
hospitals and other service providers; failure to achieve targeted
operating cost productivity improvements, including savings
resulting from technology enhancement and administrative
modernization; increases in costs and other liabilities associated
with increased litigation, government investigations, audits or
reviews; failure to manage successfully our strategic alliances or
complete or receive anticipated benefits of acquisitions and other
strategic transactions; fluctuations in foreign currency exchange
rates on our reported shareholders’ equity and results of
operations; downgrades in our credit ratings; the performance of
our investment portfolio; impairment of the value of our goodwill
and intangible assets if estimated future results do not adequately
support goodwill and intangible assets recorded for our existing
businesses or the businesses that we acquire; failure to maintain
effective and efficient information systems or if our technology
products do not operate as intended; and our ability to obtain
sufficient funds from our regulated subsidiaries or the debt or
capital markets to fund our obligations, to maintain our debt to
total capital ratio at targeted levels, to maintain our quarterly
dividend payment cycle or to continue repurchasing shares of our
common stock.
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 filings with the
Securities and Exchange Commission, including our annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Any or all forward-looking statements we make may turn
out to be wrong, and can be affected by inaccurate assumptions we
might make or by known or unknown risks and uncertainties. By their
nature, forward-looking statements are not guarantees of future
performance or results and are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Actual
future results may vary materially from expectations expressed or
implied in this document or any of our prior communications. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. We do not undertake
to update or revise any forward-looking statements, except as
required by applicable securities laws.
UNITEDHEALTH GROUP Earnings Release
Schedules and Supplementary Information Quarter Ended March
31, 2018 - 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 Measures
UNITEDHEALTH GROUPCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(in millions, except per share
data)(unaudited)
Three Months Ended March 31,
2018 2017 Revenues Premiums $ 44,084 $ 38,938
Products 6,702 6,129 Services 4,104 3,434 Investment and other
income 298 222 Total revenues
55,188 48,723
Operating costs Medical
costs 35,863 32,079 Operating costs 8,506 7,022 Cost of products
sold 6,184 5,676 Depreciation and amortization 582
533 Total operating costs 51,135
45,310
Earnings from operations 4,053 3,413 Interest
expense (329 ) (283 )
Earnings before income
taxes 3,724 3,130 Provision for income taxes (800 )
(939 )
Net earnings 2,924 2,191 Earnings attributable
to noncontrolling interests (88 ) (19 )
Net earnings attributable to
UnitedHealth Group common shareholders
$ 2,836 $ 2,172
Diluted earnings per share attributable
to UnitedHealth Group common shareholders
$ 2.87 $ 2.23
Adjusted earnings per share
attributable to UnitedHealth Group common shareholders (a)
$ 3.04 $ 2.37 Diluted weighted-average common shares
outstanding 987 975
(a) See page 6 for a reconciliation of the
non-GAAP measure
UNITEDHEALTH GROUPCONDENSED CONSOLIDATED BALANCE
SHEETS(in millions)(unaudited)
March
31,2018 December 31,2017 Assets
Cash and short-term investments $ 22,041 $ 15,490 Accounts
receivable, net 11,512 9,568 Other current assets 14,800
12,026 Total current assets 48,353 37,084 Long-term
investments 29,441 28,341 Other long-term assets 77,775
73,633 Total assets $ 155,569 $ 139,058
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable $ 19,589 $ 17,871 Commercial paper and
current maturities of long-term debt 7,379 2,857 Other current
liabilities 40,699 29,735 Total current liabilities
67,667 50,463 Long-term debt, less current maturities 28,206 28,835
Other long-term liabilities 7,770 7,738 Redeemable noncontrolling
interests 1,890 2,189 Equity 50,036 49,833 Total
liabilities, redeemable noncontrolling interests and equity $
155,569 $ 139,058
UNITEDHEALTH GROUPCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited)
Three Months Ended
March 31,
2018 2017 Operating Activities Net earnings $
2,924 $ 2,191 Noncash items: Depreciation and amortization 582 533
Deferred income taxes and other (47 ) (46 ) Share-based
compensation 208 196 Net changes in operating assets and
liabilities 4,702 3,582 Cash flows from
operating activities 8,369 6,456
Investing Activities Purchases of investments, net of sales
and maturities (1,385 ) (1,339 ) Purchases of property, equipment
and capitalized software (477 ) (507 ) Cash paid for acquisitions,
net (2,583 ) (468 ) Other, net (72 ) 25 Cash
flows used for investing activities (4,517 ) (2,289 )
Financing Activities Common share repurchases (2,650
) (682 ) Dividends paid (722 ) (596 ) Net change in commercial
paper and long-term debt 3,159 (189 ) Other, net 2,635
2,992 Cash flows from financing activities
2,422 1,525 Effect of exchange rate
changes on cash and cash equivalents (12 ) 20
Increase in cash and cash equivalents 6,262 5,712 Cash and cash
equivalents, beginning of period 11,981 10,430
Cash and cash equivalents, end of period $ 18,243 $
16,142
Supplemental Schedule of Noncash Investing
Activities Common stock issued for acquisition $ - $ 1,860
UNITEDHEALTH GROUPSUPPLEMENTAL FINANCIAL
INFORMATION - BUSINESSES(in millions, except
percentages)(unaudited)
Three Months Ended
March 31,
2018 2017 Revenues UnitedHealthcare $ 45,459 $
40,136 Optum 23,601 21,237 Eliminations (13,872 )
(12,650 ) Total consolidated revenues $ 55,188 $ 48,723
Earnings from Operations UnitedHealthcare $
2,400 $ 2,134 Optum (a) 1,653 1,279
Total consolidated earnings from operations $ 4,053 $ 3,413
Operating Margin UnitedHealthcare 5.3 % 5.3 %
Optum 7.0 % 6.0 % Consolidated operating margin 7.3 % 7.0 %
Revenues UnitedHealthcare Employer & Individual $
13,414 $ 12,739 UnitedHealthcare Medicare & Retirement 18,925
16,552 UnitedHealthcare Community & State 10,671 8,949
UnitedHealthcare Global 2,449 1,896 OptumHealth $ 5,759 $
4,733 OptumInsight 2,069 1,843 OptumRx 16,106 14,947 Optum
eliminations (333 ) (286 ) (a) Earnings from operations for
Optum for the three months ended March 31, 2018 and 2017 included
$488 and $332 for OptumHealth; $395 and $294 for OptumInsight; and
$770 and $653 for OptumRx, respectively.
UNITEDHEALTH
GROUPSUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS
METRICS UNITEDHEALTHCARE CUSTOMER
PROFILE(in thousands) People Served
March 31,
2018
December 31,
2017
March 31,
2017
Commercial group: Risk-based 7,860 7,935 7,695 Fee-based
18,475 18,595 19,155 Total commercial group
26,335 26,530 26,850 Individual 475 485 585
Total Commercial (a) 26,810 27,015
27,435 Medicare Advantage 4,760 4,430 4,305 Medicaid 6,695 6,705
6,200 Medicare Supplement (Standardized) 4,490 4,445
4,350
Total Public and Senior 15,945
15,580 14,855
Total UnitedHealthcare - Domestic
Medical 42,755 42,595 42,290 International 6,095
4,080 4,165
Total UnitedHealthcare - Medical
48,850 46,675 46,455
Supplemental Data
Medicare Part D stand-alone 4,770 4,940 4,955
OPTUM PERFORMANCE METRICS March 31,
2018
December 31,
2017
March 31,
2017
OptumHealth Consumers Served (in millions) (a) 91 88 82
OptumInsight Contract Backlog (in billions) $ 15.2 $ 15.0 $ 13.1
OptumRx Quarterly Adjusted Scripts (in millions) 332 333 322
(a) Excludes TRICARE of 2.9 million at December 31, 2017 and March
31, 2017. Note: UnitedHealth Group served 139 million unique
individuals across all businesses at March 31, 2018.
UNITEDHEALTH GROUP Reconciliation of Non-GAAP
Financial Measures - Adjusted Net Earnings per Share
- Adjusted Cash Flows from Operations
Use of
Non-GAAP Financial Measures Adjusted net earnings per share and
adjusted cash flows from operations are non-GAAP financial
measures. 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.
Management believes that the use of
adjusted cash flows from operations provides investors and
management with useful information to compare our cash flows from
operations for the current period to that of other periods, when
the Company does not receive its monthly payment from the Centers
for Medicare and Medicaid Services (CMS) in the applicable quarter.
CMS generally remits their monthly payments on the first calendar
day of the applicable month. However, if the first calendar day of
the month falls on a weekend or a holiday, CMS has typically paid
the Company on the last business day of the preceding calendar
month. As such, quarterly operating cash flows determined in
accordance with GAAP may occasionally include CMS premium payments
for two months or four months. Adjusted cash flows from operating
activities presents operating cash flows assuming all CMS payments
were received on the first calendar day of the applicable
month.
UNITEDHEALTH GROUPRECONCILIATION OF NON-GAAP
FINANCIAL MEASURES(in millions, except per share
data)(unaudited)
ADJUSTED NET
EARNINGS PER SHARE Three Months Ended March 31,
Projected
Year Ended
December 31,
2018 2017 2018 GAAP net earnings attributable
to UnitedHealth Group common shareholders $ 2,836 $ 2,172
$11,525 to $11,775
Intangible amortization 220 219 ~885 Tax effect of intangible
amortization (55 ) (82 ) ~(220) Adjusted net earnings
attributable to UnitedHealth Group common shareholders $ 3,001
$ 2,309 $12,200 to $12,450 GAAP diluted
earnings per share $ 2.87 $ 2.23 $11.70 to $11.95 Intangible
amortization per share 0.22 0.22 ~0.90 Tax effect per share of
intangible amortization (0.05 ) (0.08 ) ~(0.20)
Adjusted diluted earnings per share $ 3.04 $ 2.37
~$12.40 to $12.65
ADJUSTED CASH FLOWS FROM OPERATIONS
Three Months Ended March 31, 2018 2017
GAAP cash flows from operations $ 8,369 $ 6,456 Add: April CMS
premium payments received in March (5,144 ) (4,442 )
Adjusted cash flows from operations $ 3,225 $ 2,014
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UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice
PresidentorJohn S. Penshorn, 952-936-7214Senior Vice
PresidentorMedia:Tyler Mason, 424-333-6122Vice President
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