- Revenues of $65.1 Billion Grew 8%, led by 21% Growth at
Optum
- Net Earnings of $3.30 Per Share and Adjusted Earnings of
$3.51 Per Share
- Results Reflect Extensive Consumer, Customer, Care Provider
and Community Assistance Initiatives and Other COVID-19 Related
Impacts
- Underlying Business Performance Remains Strong
During the third quarter of 2020, UnitedHealth Group (NYSE: UNH)
saw continued growth, led by Optum and the UnitedHealthcare
public-sector and senior benefits businesses, even as the Company
continued its expansive COVID-19 response efforts supporting
patients, care providers, customers and communities.
“The people of UnitedHealth Group continue to deliver more
innovative and modern solutions for customers, physicians and
consumers, while responding to the needs of the people and
communities affected by the pandemic,” said David S. Wichmann,
chief executive officer of UnitedHealth Group. “We’re encouraged to
see those we serve respond to the incentives we offered to safely
seek care as the health system continued to recover in the
quarter.”
As expected, strong underlying performance across business
segments continued to be impacted by the voluntary consumer and
customer assistance initiatives undertaken by the Company. Net
earnings of $3.30 per share and adjusted earnings of $3.51 per
share declined 10%, while care patterns disrupted by the pandemic
moved closer to normal levels. The Company is updating its full
year earnings per share outlook for 2020 to net earnings of $15.65
to $15.90 per share and adjusted net earnings of $16.50 to $16.75
per share.
The Company’s efforts to proactively help patients obtain the
care they need continues, along with additional investments to
support those affected by COVID-19. Since the crisis onset, the
enterprise has been mobilized to maintain comprehensive front-line
care; develop innovative methods and protocols for detection,
testing, treatment and vaccine discovery; and support the broader
health system and communities in need. During the third quarter,
the Company continued to work with local and state leaders across
the country to expand testing; contact tracing; and education,
medical and mental health support, especially in under-resourced
communities. The Company continues to invest and partner with
premier research institutions to improve outcomes for minority
populations affected during the crisis.
Quarterly Financial Performance
Three
Months Ended
September 30, 2020
September 30, 2019
June 30, 2020
Revenues
$65.1 billion
$60.4 billion
$62.1 billion
Earnings from Operations
$4.7 billion
$5.0 billion
$9.2 billion
Net Margin
4.9%
5.9%
10.7%
- UnitedHealth Group’s third quarter 2020 revenues of $65.1
billion compare to $60.4 billion a year ago, driven by growth at
Optum and in UnitedHealthcare’s public-sector and senior
businesses.
- Third quarter earnings from operations of $4.7 billion compared
to $5.0 billion last year. The decline reflects the extensive
consumer and customer financial assistance measures undertaken by
the Company, as well as direct COVID-19 care and testing costs and
broader economic effects, partially offset by reduced overall care
demand.
- Cash flows from operations were $3.1 billion or 1x net income
in the third quarter and $16.1 billion or 1.2x net income
year-to-date. Cash flows for the third quarter were impacted by
U.S. Treasury’s deferral of federal tax payments from the second
quarter to the third quarter.
- The third quarter medical care ratio of 81.9% compared to 82.4%
last year, impacted by modestly lower care patterns and the return
of the health insurance tax, offset by the Company’s COVID-19
assistance measures. Favorable reserve development was $380 million
in the third quarter, with $240 million related to 2020 and $140
million to prior year periods. Days claims payable were 46.8 days
compared to 49.3 in the third quarter 2019 and 50.4 in the second
quarter 2020. The year-over-year comparison was impacted by the
Company’s acceleration of payments to care providers for needed
health system liquidity, while the sequential comparison reflects
increased care utilization from highly constrained second quarter
levels.
- The operating cost ratio of 15.6% in the third quarter of 2020
increased from 14.8% in the same period last year, due to the
health insurance tax, COVID-19 response efforts and business
mix.
- Year-to-date return on equity of 28.9% reflects continued
strong operating performance and the temporary impact of care
deferrals earlier in the year.
UnitedHealthcare provides health care benefits globally, serving
individuals and employers, and Medicare and Medicaid beneficiaries.
UnitedHealthcare is dedicated to improving the value 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
September 30, 2020
September 30, 2019
June 30, 2020
Revenues
$50.4 billion
$48.1 billion
$49.1 billion
Earnings from Operations
$2.1 billion
$2.7 billion
$7.0 billion
Operating Margin
4.1%
5.5%
14.3%
- UnitedHealthcare third quarter revenues of $50.4 billion
compare to $48.1 billion in the year ago quarter, as growth in
serving public-sector and senior programs was partially offset by
commercial enrollment declines. UnitedHealthcare public-sector and
senior program revenues, grew by 9.7% year-over-year in the
quarter, with 935,000 additional people served year to date in
Medicaid and Medicare Advantage, while commercial revenue was
impacted by member attrition due to economic factors.
- Operating earnings of $2.1 billion in the third quarter compare
to $2.7 billion last year, with the expected decline due to the
impact of the Company’s consumer and customer assistance measures
and COVID-19 related costs, partially offset by still modestly
lower care patterns which were significantly above second quarter
levels. The Company expects future periods will reflect the
resumption of more typical care patterns and continued COVID-19
treatment and testing costs, against the continued backdrop of an
uncertain economic recovery.
- UnitedHealthcare growth highlights include strong positioning
in Medicare Advantage in 2021; expected Medicaid membership gains
in 2021 through entry into Kentucky, Indiana and North Carolina and
expansion in Nebraska, along with a strong proposal pipeline for
existing and new states; continued growth in dual special needs
plans; commercial market expansion in specialty benefits and new
provider-led benefit plans.
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
September 30, 2020
September 30, 2019
June 30, 2020
Revenues
$34.9 billion
$28.8 billion
$32.7 billion
Earnings from Operations
$2.6 billion
$2.4 billion
$2.2 billion
Operating Margin
7.4%
8.2%
6.8%
- Optum third quarter revenues and operating earnings of $34.9
billion and $2.6 billion respectively advanced from $28.8 billion
and $2.4 billion a year ago.
- OptumHealth served 98 million people in the third quarter,
compared to 95 million a year ago, while revenue per consumer
served increased 25% year-over-year, continuing its strong growth,
driven by further expansion of people served in value-based care
arrangements. OptumHealth’s care delivery practices were impacted
by modestly lower care patterns that were significantly closer to
normal levels than the second quarter.
- The OptumInsight revenue backlog increased by $500 million in
the quarter to nearly $20 billion, driven by growth in managed
services. Activity levels were affected by care deferrals in
volume-based services.
- OptumRx continued to invest in building its growing pharmacy
services offerings, including areas such as community-based
behavioral health pharmacies, e-commerce services, home infusion
services and specialty pharmacy expansion. Overall script volumes
continued to approach more normal levels, rising 9 million
sequentially to 325 million.
- Optum growth highlights include continued strong growth in
payer relationships serving seniors at OptumCare through senior
clinics, in the home services and through more than 1 million
virtual visits this year. The Company continues to drive its
expansion of integrated specialty medical and pharmacy management
services across OptumRx and OptumCare. OptumInsight’s pipeline is
expanding for comprehensive managed services, including revenue
management, information technology, payment integrity and data
analytics outsourcing.
About UnitedHealth Group
UnitedHealth Group (NYSE: UNH) is a diversified health care
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 Investor
Relations page of the company’s website
(www.unitedhealthgroup.com). Following the call, a webcast replay
will be available on the same site through October 28, 2020. The
conference call replay can also be accessed by dialing
1-800-839-5493. This earnings release and the Form 8-K dated
October 14, 2020, can also be accessed from the Investor Relations
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
which are intended to take advantage of the “safe harbor”
provisions of the federal securities law. The words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “forecast,”
“outlook,” “plan,” “project,” “should” and similar expressions
identify forward-looking statements. These statements may contain
information about financial prospects, economic conditions and
trends and involve risks and uncertainties. Actual results could
differ materially from those that management expects, depending on
the outcome of certain factors including: risks associated with
public health crises, large-scale medical emergencies and
pandemics, such as the COVID-19 pandemic; our ability to
effectively estimate, price for and manage medical costs; new or
changes in existing health care laws or regulations, or their
enforcement or application; the DOJ’s legal action relating to the
risk adjustment submission matter; our ability to maintain and
achieve improvement in quality scores impacting revenue; reductions
in revenue or delays to cash flows received under government
programs; changes in Medicare, the CMS star ratings program or the
application of risk adjustment data validation audits; failure to
maintain effective and efficient information systems or if our
technology products do not operate as intended; cyberattacks, other
privacy/data security incidents, or our failure to comply with
related regulations; risks and uncertainties associated with the
pharmacy benefits management industry; competitive pressures;
changes in or challenges to our public sector contract awards; our
ability to contract on competitive terms with physicians, hospitals
and other service providers; failure to achieve targeted operating
cost productivity improvements; increases in costs and other
liabilities associated with litigation, government investigations,
audits or reviews; failure to manage successfully our strategic
alliances or complete or receive anticipated benefits of strategic
transactions; fluctuations in foreign currency exchange rates;
downgrades in our credit ratings; our investment portfolio
performance; impairment of our goodwill and intangible assets; and
our ability to obtain sufficient funds from our regulated
subsidiaries or from external financings to fund our obligations,
maintain our debt to total capital ratio at targeted levels,
maintain our quarterly dividend payment cycle, or continue
repurchasing shares of our common stock. This above list is not
exhaustive. We discuss these matters, and certain risks that may
affect our business operations, financial condition and results of
operations more fully in our filings with the SEC, including our
reports on Forms 10-K, 10-Q and 8-K. 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 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 law.
UNITEDHEALTH GROUP Earnings Release Schedules and
Supplementary Information Quarter Ended September 30,
2020 - 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
UNITEDHEALTH
GROUP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data) (unaudited)
Three
Months EndedSeptember 30, Nine Months EndedSeptember 30,
2020
2019
2020
2019
Revenues Premiums
$50,863
$47,397
$150,897
$142,074
Products
8,777
7,546
25,455
23,971
Services
5,124
4,942
14,265
13,756
Investment and other income
351
466
1,057
1,453
Total revenues
65,115
60,351
191,674
181,254
Operating costs Medical costs
41,636
39,041
117,314
117,164
Operating costs
10,174
8,960
30,190
25,892
Cost of products sold
7,935
6,627
23,123
21,606
Depreciation and amortization
719
709
2,159
2,002
Total operating costs
60,464
55,337
172,786
166,664
Earnings from operations
4,651
5,014
18,888
14,590
Interest expense
(395)
(449)
(1,262)
(1,267)
Earnings before income taxes
4,256
4,565
17,626
13,323
Provision for income taxes
(1,000)
(936)
(4,209)
(2,752)
Net earnings
3,256
3,629
13,417
10,571
Earnings attributable to noncontrolling interests
(84)
(91)
(226)
(273)
Net earnings attributable to UnitedHealth Group common
shareholders
$3,172
$3,538
$13,191
$10,298
Diluted earnings per share attributable to UnitedHealth Group
common shareholders
$3.30
$3.67
$13.73
$10.65
Adjusted earnings per share attributable to UnitedHealth Group
common shareholders (a)
$3.51
$3.88
$14.36
$11.22
Diluted weighted-average common shares outstanding
962
963
961
967
(a)
See page 6 for a reconciliation
of the non-GAAP measure
UNITEDHEALTH GROUP CONDENSED CONSOLIDATED BALANCE
SHEETS (in millions) (unaudited)
September 30,
December 31,
2020
2019
Assets Cash and short-term investments
$20,809
$14,245
Accounts receivable, net
12,171
11,822
Other current assets
21,841
16,567
Total current assets
54,821
42,634
Long-term investments
39,184
37,209
Other long-term assets
96,964
94,046
Total assets
$190,969
$173,889
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable
$21,167
$21,690
Short-term borrowings and current maturities of long-term debt
3,899
3,870
Other current liabilities
41,531
36,222
Total current liabilities
66,597
61,782
Long-term debt, less current maturities
39,895
36,808
Other long-term liabilities
14,526
13,137
Redeemable noncontrolling interests
1,847
1,726
Equity
68,104
60,436
Total liabilities, redeemable noncontrolling interests and equity
$190,969
$173,889
UNITEDHEALTH GROUP CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in millions) (unaudited)
Nine Months
EndedSeptember 30,
2020
2019
Operating Activities Net earnings
$13,417
$10,571
Noncash items: Depreciation and amortization
2,159
2,002
Deferred income taxes and other
167
(4)
Share-based compensation
527
525
Net changes in operating assets and liabilities
(197)
(836)
Cash flows from operating activities
16,073
12,258
Investing Activities Purchases of investments, net of sales
and maturities
(1,386)
(2,028)
Purchases of property, equipment and capitalized software
(1,477)
(1,421)
Cash paid for acquisitions, net
(4,326)
(8,200)
Other, net
(165)
338
Cash flows used for investing activities
(7,354)
(11,311)
Financing Activities Common share repurchases
(2,541)
(5,101)
Dividends paid
(3,400)
(2,908)
Net change in short-term borrowings and long-term debt
2,941
8,192
Other, net
1,006
404
Cash flows (used for) from financing activities
(1,994)
587
Effect of exchange rate changes on cash and cash equivalents
(160)
(37)
Increase in cash and cash equivalents
6,565
1,497
Cash and cash equivalents, beginning of period
10,985
10,866
Cash and cash equivalents, end of period
$17,550
$12,363
UNITEDHEALTH GROUP SUPPLEMENTAL FINANCIAL INFORMATION -
BUSINESSES (in millions, except percentages) (unaudited)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30,
2020
2019
2020
2019
Revenues UnitedHealthcare
$50,373
$48,105
$150,548
$145,595
Optum
34,923
28,763
100,457
83,152
Eliminations
(20,181)
(16,517)
(59,331)
(47,493)
Total consolidated revenues
$65,115
$60,351
$191,674
$181,254
Earnings from Operations UnitedHealthcare
$2,068
$2,655
$11,963
$8,251
Optum (a)
2,583
2,359
6,925
6,339
Total consolidated earnings from operations
$4,651
$5,014
$18,888
$14,590
Operating Margin UnitedHealthcare
4.1%
5.5%
7.9%
5.7%
Optum
7.4%
8.2%
6.9%
7.6%
Consolidated operating margin
7.1%
8.3%
9.9%
8.0%
Revenues UnitedHealthcare Employer & Individual
$14,081
$14,291
$41,324
$42,407
UnitedHealthcare Medicare & Retirement
22,606
20,698
68,613
62,649
UnitedHealthcare Community & State
11,820
10,670
34,796
33,038
UnitedHealthcare Global
1,866
2,446
5,815
7,501
OptumHealth
$10,499
$8,133
$28,830
$21,994
OptumInsight
2,767
2,617
7,893
7,145
OptumRx
22,081
18,454
65,009
55,194
Optum eliminations
(424)
(441)
(1,275)
(1,181)
(a) Earnings from operations for Optum for the three and nine
months ended September 30, 2020 included $835 and $2,388 for
OptumHealth; $785 and $1,882 for OptumInsight; and $963 and $2,655
for OptumRx, respectively. Earnings from operations for Optum for
the three and nine months ended September 30, 2019 included $748
and $2,062 for OptumHealth; $632 and $1,589 for OptumInsight; and
$979 and $2,688 for OptumRx, respectively.
UNITEDHEALTH
GROUP SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS
METRICS UNITEDHEALTHCARE CUSTOMER PROFILE (in
thousands)
People Served September 30, 2020
June 30, 2020 December 31, 2019 September 30,
2019 Commercial: Risk-based
7,950
8,065
8,575
8,605
Fee-based
18,400
18,705
19,185
19,230
Total Commercial
26,350
26,770
27,760
27,835
Medicare Advantage
5,670
5,605
5,270
5,230
Medicaid
6,435
6,210
5,900
5,965
Medicare Supplement (Standardized)
4,450
4,450
4,500
4,510
Total Public and Senior
16,555
16,265
15,670
15,705
Total UnitedHealthcare - Domestic Medical
42,905
43,035
43,430
43,540
Global
5,285
5,365
5,720
5,845
Total UnitedHealthcare - Medical
48,190
48,400
49,150
49,385
Supplemental Data
Medicare Part D stand-alone
4,075
4,120
4,405
4,415
OPTUM PERFORMANCE METRICS September
30, 2020 June 30, 2020 December 31, 2019
September 30, 2019 OptumHealth Consumers Served (in
millions)
98
97
96
95
OptumInsight Contract Backlog (in billions)
$19.9
$19.4
$19.3
$19.0
OptumRx Quarterly Adjusted Scripts (in millions)
325
316
333
325
Note: UnitedHealth Group served 140 million unique
individuals across all businesses at September 30, 2020.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURE
(in millions, except per share
data)
(unaudited)
ADJUSTED NET EARNINGS PER
SHARE(a)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, ProjectedYear EndedDecember 31,
2020
2019
2020
2019
2020
GAAP net earnings attributable to UnitedHealth Group common
shareholders
$3,172
$3,538
$13,191
$10,298
$15,025 - $15,275 Intangible amortization
269
262
801
729
~1,070 Tax effect of intangible amortization
(64
)
(64
)
(194
)
(180
)
~(260) Adjusted net earnings attributable to UnitedHealth Group
common shareholders
$3,377
$3,736
$13,798
$10,847
$15,835 - $16,085 GAAP diluted earnings per share
$3.30
$3.67
$13.73
$10.65
$15.65 - $15.90 Intangible amortization per share
0.28
0.27
0.83
0.75
~1.10 Tax effect per share of intangible amortization
(0.07
)
(0.06
)
(0.20
)
(0.18
)
~(0.25) Adjusted diluted earnings per share
$3.51
$3.88
$14.36
$11.22
$16.50 - $16.75
(a)
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. As amortization fluctuates based on
the size and timing of the Company’s acquisition activity,
management believes this exclusion provides a more useful
comparison of the Company's underlying business performance and
trends from period to period. While intangible assets contribute to
the Company’s revenue generation, the intangible amortization is
not directly related. Therefore, the related revenues are included
in adjusted earnings per share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201014005337/en/
Investors: Brett Manderfeld Senior Vice President
952-936-7216
Media: Matt Stearns Senior Vice President
202-276-0085
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Aug 2024 to Sep 2024
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Sep 2023 to Sep 2024