- Revenues of $60.3 Billion Grew 9%
Year-Over-Year
- Earnings from Operations Increased
19% to $4.8 Billion, With Strong Earnings Growth at Optum and
UnitedHealthcare
- Net Earnings of $3.56 Per Share Grew
24% Year-Over-Year
- Adjusted Net Earnings of $3.73 Per
Share Grew 23% Year-Over-year
Strong, well-diversified performance continued across
UnitedHealth Group (NYSE: UNH) in first quarter 2019.
“Our employees’ shared vision of improving the health of the
people we serve and the performance of health systems for everyone
is producing value for society and driving consistent growth for
our businesses,” said David S. Wichmann, chief executive officer of
UnitedHealth Group.
With visibility on improved 2019 performance trends and based on
the strong first quarter results, the Company increased its
earnings outlook to net earnings of $13.80 to $14.05 per share, and
adjusted net earnings of $14.50 to $14.75 per share.
Quarterly Financial Performance
Three Months
Ended
March 31,2019
March 31,2018
December 31,2018
Revenues $60.3 billion $55.2 billion $58.4 billion Earnings from
Operations $4.8 billion $4.1 billion $4.5 billion Net Margin
5.7% 5.1% 5.2%
- UnitedHealth Group’s first quarter 2019
revenues grew 9.3 percent or $5.1 billion year-over-year to $60.3
billion, led by UnitedHealthcare Medicare & Retirement, OptumRx
and OptumHealth.
- First quarter earnings from operations
grew $779 million or 19.2 percent year-over-year to $4.8 billion.
Adjusted net earnings of $3.73 per share grew 22.7 percent, driven
by top-line growth and 60 basis points of net margin
expansion.
- Consistent with the Company’s full year
2019 expectations, first quarter cash flows from operations were
$3.2 billion, or 0.9x net income, and were consistent with first
quarter 2018 adjusted cash flows from operations, despite $0.7
billion in lower health insurance tax collections due to its
deferral in 2019.
- The revenue effect from the deferral of
the health insurance tax was the primary driver of the 60 basis
point year-over-year increase in the consolidated medical care
ratio to 82.0 percent in first quarter 2019. Medical cost trends
remained well-managed and included $300 million in favorable
reserve development in the quarter, consistent with the level of
development reported one year ago. Days claims payable of 49 days
were also consistent with first quarter 2018.
- The operating cost ratio of 14.1
percent in first quarter 2019 improved 130 basis points from its
first quarter 2018 level, due to the deferral of the health
insurance tax and strong cost management disciplines.
- The income tax rate of 19.7 percent in
first quarter 2019 decreased from 21.5 percent in first quarter
2018, reflecting the effect of the health insurance tax
deferral.
- Return on equity of 26.8 percent
continued to reflect the Company’s strong services business mix and
overall margin profile. Dividend payments grew 19.1 percent
year-over-year to $860 million, and the Company repurchased 11.9
million shares for $3.0 billion in first quarter 2019.
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
March 31,2019
March 31,2018
December 31,2018
Revenues
$48.9 billion
$45.5 billion
$46.2 billion
Earnings from Operations $3.0 billion $2.4 billion $1.8 billion
Operating Margin 6.0% 5.3%
3.9%
- UnitedHealthcare grew to serve 880,000
more people with medical benefits over the past year, helping grow
first quarter 2019 revenues by $3.4 billion, or 7.6 percent, to
$48.9 billion. First quarter 2019 earnings from operations grew
23.1 percent to $3.0 billion.
- UnitedHealthcare
Employer & Individual first quarter 2019 revenues of
$14.1 billion increased $670 million year-over-year.
UnitedHealthcare grew to serve 705,000 more people with commercial
benefits in the past year, driven by expanding services to
self-funded employers in the first quarter through a business
combination and organic growth of 125,000 people. In the full risk
market, the business experienced stable year-over-year enrollment
after considering a decrease of 155,000 people in the first
quarter, with sequential growth expected over the balance of the
year.
- UnitedHealthcare
Medicare & Retirement revenues grew by $2.2 billion or
11.5 percent to $21.1 billion in first quarter 2019. Medicare
Advantage products grew to serve 405,000 more people
year-over-year, including 220,000 individual and employer-sponsored
seniors in the quarter.
- In first quarter 2019, UnitedHealthcare Community & State revenues
grew $511 million or 4.8 percent to $11.2 billion, driven by growth
in serving people with higher acuity needs, such as dual eligibles
and participants in long-term services and supports programs.
UnitedHealthcare Community & State served 25,000 fewer people
in first quarter 2019.
- UnitedHealthcare
Global revenues grew $85 million or 3.5 percent to $2.5
billion in first quarter 2019, with the global health plans growing
to serve 30,000 more people year-over-year.
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
March 31,
2019
March 31,
2018
December 31,
2018
Revenues
$26.4 billion
$23.6 billion
$27.6 billion
Earnings from Operations $1.9 billion $1.7 billion $2.7 billion
Operating Margin 7.1% 7.0%
9.8%
- In the first quarter of 2019, Optum
revenues grew by $2.8 billion or 11.7 percent year-over-year to
$26.4 billion. Due to strong revenue growth, Optum’s first quarter
2019 earnings from operations grew $225 million or 13.6 percent
year-over-year to $1.9 billion.
- OptumHealth revenues of $6.7 billion grew $1.0
billion or 16.6 percent year-over-year, with diversified growth led
by care delivery, behavioral health and health financial services.
OptumHealth served approximately 93 million people at March 31,
2019, up 2 million people from the prior year, with a 14 percent
increase in average revenue intensity per consumer driven by growth
in value-based care arrangements and overall business mix.
- OptumInsight revenues grew 5.8 percent
year-over-year to $2.2 billion in first quarter 2019, while revenue
backlog grew 14.5 percent year-over-year to $17.4 billion at
quarter end.
- In first quarter 2019, OptumRx revenues increased $1.7 billion or 10.6
percent year-over-year to $17.8 billion, reflecting increased
script volumes and a higher mix of specialty drugs. OptumRx
fulfilled 339 million adjusted scripts in first quarter 2019, which
is growth of 2.1 percent over the prior year, consistent with full
year 2019 growth projections.
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 Investors
page of the Company’s website (www.unitedhealthgroup.com).
Following the call, a webcast replay will be available on the same
site through April 30, 2019. The conference call replay can also be
accessed by dialing 1-800-839-0861. This earnings release and the
Form 8-K dated April 16, 2019 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., South
American and other jurisdictions’ regulations affecting the health
care industry; the outcome of the DOJ’s legal action relating to
the risk adjustment submission matter; 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, 2019 - 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 GROUP CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in millions, except per share data)
(unaudited)
Three Months
Ended
March 31,
2019 2018 Revenues Premiums $ 47,513 $ 44,084
Products 8,072 6,702 Services 4,318 4,104 Investment and other
income 405 298 Total revenues
60,308 55,188
Operating
costs Medical costs 38,939 35,863 Operating costs 8,517 8,506
Cost of products sold 7,381 6,184 Depreciation and amortization
639 582 Total operating costs
55,476 51,135
Earnings from
operations 4,832 4,053 Interest expense (400 )
(329 )
Earnings before income taxes 4,432
3,724 Provision for income taxes (875 ) (800 )
Net earnings 3,557 2,924 Earnings attributable
to noncontrolling interests (90 ) (88 )
Net earnings attributable to
UnitedHealth Group common shareholders
$ 3,467 $ 2,836
Diluted earnings per share attributable
to UnitedHealth Group common shareholders
$ 3.56 $ 2.87
Adjusted earnings per share
attributable to UnitedHealth Group common shareholders
(a)
$ 3.73 $ 3.04 Diluted weighted-average common
shares outstanding 975 987
(a) See page 6 for a reconciliation of the non-GAAP
measure
UNITEDHEALTH
GROUP CONDENSED CONSOLIDATED BALANCE SHEETS (in
millions) (unaudited)
March 31, December 31,
2019 2018 Assets Cash and short-term
investments $ 15,710 $ 14,324 Accounts receivable, net 12,826
11,388 Other current assets 14,279 12,980
Total current assets 42,815 38,692 Long-term investments
33,553 32,510 Other long-term assets 84,829 81,019
Total assets $ 161,197 $ 152,221
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable $ 21,139 $ 19,891 Commercial paper and
current maturities of long-term debt 3,919 1,973 Other current
liabilities 33,875 31,345 Total current
liabilities 58,933 53,209 Long-term debt, less current
maturities 34,419 34,581 Other long-term liabilities 11,340 8,204
Redeemable noncontrolling interests 2,054 1,908 Equity
54,451 54,319 Total liabilities, redeemable
noncontrolling interests and equity $ 161,197 $ 152,221
UNITEDHEALTH GROUP CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in millions) (unaudited)
Three Months Ended
March 31,
2019 2018 Operating Activities Net earnings $
3,557 $ 2,924 Noncash items: Depreciation and amortization 639 582
Deferred income taxes and other 176 (47 ) Share-based compensation
243 208 Net changes in operating assets and liabilities
(1,381 ) 4,702 Cash flows from operating
activities 3,234 8,369
Investing Activities Purchases of investments, net of sales
and maturities (319 ) (1,385 ) Purchases of property, equipment and
capitalized software (562 ) (477 ) Cash paid for acquisitions, net
(689 ) (2,583 ) Other, net 154 (72 )
Cash flows used for investing activities (1,416 )
(4,517 )
Financing Activities Common share
repurchases (3,002 ) (2,650 ) Dividends paid (860 ) (722 ) Net
change in commercial paper and long-term debt 1,851 3,159 Other,
net 1,739 2,635 Cash flows (used
for) from financing activities (272 ) 2,422
Effect of exchange rate changes on cash and cash equivalents
(5 ) (12 ) Increase in cash and cash
equivalents 1,541 6,262 Cash and cash equivalents, beginning
of period 10,866 11,981 Cash and
cash equivalents, end of period $ 12,407 $ 18,243
UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES (in
millions, except percentages) (unaudited)
Three Months
Ended
March 31,
2019 2018 Revenues UnitedHealthcare $ 48,896 $
45,459 Optum 26,360 23,601 Eliminations (14,948 )
(13,872 ) Total consolidated revenues $ 60,308 $
55,188
Earnings from Operations
UnitedHealthcare $ 2,954 $ 2,400 Optum (a) 1,878
1,653 Total consolidated earnings from
operations $ 4,832 $ 4,053
Operating
Margin UnitedHealthcare 6.0 % 5.3 % Optum 7.1 % 7.0 %
Consolidated operating margin 8.0 % 7.3 %
Revenues UnitedHealthcare Employer & Individual $ 14,084
$ 13,414 UnitedHealthcare Medicare & Retirement 21,096 18,925
UnitedHealthcare Community & State 11,182 10,671
UnitedHealthcare Global 2,534 2,449 OptumHealth $ 6,713 $
5,759 OptumInsight 2,189 2,069 OptumRx 17,817 16,106 Optum
eliminations (359 ) (333 ) (a) Earnings from
operations for Optum for the three months ended March 31, 2019 and
2018 included $626 and $488 for OptumHealth; $432 and $395 for
OptumInsight; and $820 and $770 for OptumRx, respectively.
UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS
UNITEDHEALTHCARE CUSTOMER PROFILE (in thousands)
People Served
March 31,
2019
December 31,
2018
March 31,
2018
Commercial: Risk-based 8,340 8,495 8,335 Fee-based
19,175 18,420 18,475
Total Commercial
27,515 26,915 26,810 Medicare Advantage 5,165
4,945 4,760 Medicaid 6,425 6,450 6,695 Medicare Supplement
(Standardized) 4,500 4,545 4,490
Total
Public and Senior 16,090 15,940 15,945
Total UnitedHealthcare - Domestic Medical 43,605 42,855
42,755 International 6,125 6,220 6,095
Total UnitedHealthcare - Medical 49,730 49,075
48,850
Supplemental Data Medicare Part
D stand-alone 4,480 4,710 4,770
OPTUM PERFORMANCE METRICS March 31,
2019
December 31,
2018
March 31,
2018
OptumHealth Consumers Served (in millions) 93 93 91
OptumInsight Contract Backlog (in billions) $ 17.4 $ 17.0 $ 15.2
OptumRx Quarterly Adjusted Scripts (in millions) 339 348 332
Note: UnitedHealth Group served 142 million unique
individuals across all businesses at March 31, 2019.
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. 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
GROUP RECONCILIATION 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,
2019 2018 2019
GAAP net earnings attributable to
UnitedHealth Group common shareholders
$ 3,467 $ 2,836 $ 13,425 - $13,750 Intangible amortization 227 220
~920 Tax effect of intangible amortization (56 ) (55
) ~(230) Adjusted net earnings attributable to UnitedHealth Group
common shareholders $ 3,638 $ 3,001 $ 14,115 -
$14,440 GAAP diluted earnings per share $ 3.56 $ 2.87 $
13.80 - $14.05 Intangible amortization per share 0.23 0.22 ~0.95
Tax effect per share of intangible amortization (0.06 )
(0.05 ) ~(0.25) Adjusted diluted earnings per share $ 3.73
$ 3.04 $ 14.50 - $14.75
ADJUSTED CASH FLOWS FROM OPERATIONS Three
Months Ended
March 31, 2018
GAAP cash flows from operations $ 8,369 Less: April CMS premium
payments received in March (5,144 ) Adjusted cash flows from
operations $ 3,225
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Investors:Brett ManderfeldVice President952-936-7216
John S. PenshornSenior Vice President952-936-7214
Media:Tyler MasonVice President424-333-6122
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