• 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.

 

Investors: Brett Manderfeld Senior Vice President 952-936-7216

Media: Matt Stearns Senior Vice President 202-276-0085

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