- Second Quarter Revenues of $50.1
Billion Grew 8% Year-Over-Year
- UnitedHealthcare Grew to Serve 2.5
Million More People through Employer and Government Sponsored
Offerings in the Past 12 Months
- Optum Earnings from Operations Grew
21%, With All Optum Segments Producing Double-Digit Percentage
Earnings Growth
- Cash Flows from Operations were $2.2
Billion in the Quarter, Up 29% Year-Over-Year
- Second Quarter Net Earnings of $2.32
Per Share Grew 28% Year-Over-Year
- Second Quarter Adjusted Net Earnings
of $2.46 Per Share Grew 26% Year-Over-Year
UnitedHealth Group (NYSE: UNH) reported second quarter results,
reflecting continued broad-based growth across the enterprise.
“Continued strong revenue growth from new business and exceptional
customer retention reflects the confidence customers place in our
commitment to and effectiveness in meeting their health care
needs,” said Stephen J. Hemsley, chief executive officer of
UnitedHealth Group.
Based on performance through the first half of 2017, the Company
raised its outlook for 2017 GAAP net earnings to a range of $9.20
to $9.35 per share and adjusted net earnings to a range of $9.75 to
$9.90 per share.
Quarterly Financial Performance
Three Months
Ended
June 30, June 30, March 31,
2017
2016
2017
Revenues $50.1 billion $46.5 billion $48.7 billion Earnings From
Operations $3.7 billion $3.2 billion $3.4 billion Net Margin
4.6% 3.8% 4.5%
- UnitedHealth Group’s second quarter
2017 revenues of $50.1 billion grew 7.7 percent or $3.6 billion
year-over-year. UnitedHealthcare’s withdrawals from ACA Individual
markets, combined with the ACA health insurance tax deferral,
reduced consolidated second quarter 2017 revenues by approximately
$1.8 billion and lowered the revenue growth rate by 4.5 percent.
These factors affect comparability of 2017 results with prior
periods throughout the financial statements.
- Second quarter earnings from operations
grew 16.5 percent year-over-year to $3.7 billion. Adjusted net
earnings grew 26 percent to $2.46 per share from $1.96 per share in
the second quarter of 2016.
- Cash flows from operations were $2.2
billion in second quarter 2017, up 29 percent year-over-year.
- The second quarter 2017 consolidated
medical care ratio of 82.2 percent increased 20 basis points
year-over-year, as a 150 basis point increase from the health
insurance tax deferral was offset by improved business mix, product
performance and favorable reserve development. Medical reserves
developed favorably by $200 million in second quarter 2017,
compared to unfavorable development of $100 million in second
quarter 2016.
- The second quarter 2017 operating cost
ratio of 14.6 percent was flat year-over-year, as the growing mix
of revenues from care delivery businesses offset the effect of the
health insurance tax deferral.
- The second quarter 2017 income tax rate
declined to 31.5 percent, primarily due to the 2017 moratorium on
the nondeductible health insurance tax.
- Second quarter 2017 days claims payable
of 50 days decreased one day year-over-year, due to ACA Individual
market withdrawals, and was stable sequentially. Second quarter
days sales outstanding rose one day year-over-year and sequentially
to 19 days, due to continued growth in government-based
offerings.
- Annualized return on shareholders’
equity increased 190 basis points year-over-year to 21.5 percent in
second quarter, while the debt to total capital ratio decreased 650
basis points to 41.3 percent at June 30, 2017.
- Dividends paid to shareholders grew 22
percent year-over-year to $724 million in the second quarter,
reflecting the 20 percent increase in the annual dividend payment
rate to $3.00 per share in June 2017. At June 30, 2017, the Company
had repurchased 6.4 million shares year-to-date for $1.045 billion,
including 2.2 million shares in the second quarter.
UnitedHealthcare provides global health care benefits, serving
individuals and employers, Medicare and Medicaid beneficiaries and
the nation’s military, retirees and their families.
Quarterly Financial Performance
Three Months
Ended
June 30, June 30, March 31,
2017
2016
2017
Revenues $40.8 billion $37.6 billion $40.1 billion Earnings From
Operations $2.2 billion $1.9 billion $2.1 billion Operating Margin
5.4% 5.2% 5.3%
- UnitedHealthcare’s second quarter 2017
revenues of $40.8 billion grew $3.2 billion or 8.6 percent
year-over-year. UnitedHealthcare grew to serve 2.5 million more
people year-over-year, including 195,000 in the second quarter of
2017, across its employer-sponsored, Medicare, Medicaid and
international medical benefit offerings. Second quarter 2017
earnings from operations for UnitedHealthcare of $2.2 billion
increased $269 million or 13.9 percent from 2016, driven by strong,
diversified revenue growth and a modest improvement in operating
margins.
- UnitedHealthcare
Employer & Individual second quarter 2017 revenues of
$13 billion decreased $543 million year-over-year due to the
effects of the previously disclosed Individual market withdrawals
and health insurance tax deferral. These factors offset revenue
increases from strong growth of 765,000 people in commercial
group-based benefit offerings, including 590,000 in commercial
risk-based arrangements, and rate increases commensurate with
medical cost trends. In the second quarter, commercial risk-based
group business grew by 70,000 people and fee-based programs
decreased by 45,000 people, due to seasonal reductions in workforce
at certain customers.
- UnitedHealthcare
Medicare & Retirement grew revenues by $2.5 billion or
17.2 percent year-over-year to $16.7 billion in second quarter
2017. UnitedHealthcare served 8.7 million seniors with medical
benefit products at quarter end, growth of 935,000 people or 12
percent year-over-year. In the second quarter of 2017, the business
served 45,000 more seniors, including 35,000 people through
Medicare Advantage.
- In the second quarter of 2017,
UnitedHealthcare Community & State
revenues of $9.2 billion grew $915 million or 11.1 percent
year-over-year, reflecting strong membership growth with an
increasing mix of individuals with greater health care needs.
Community & State served 705,000 more people year-over-year,
including 180,000 in the second quarter. UnitedHealthcare is
implementing new awards in California, Missouri, Nebraska and
Virginia this 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
information, 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
June 30, June 30, March 31,
2017
2016
2017
Revenues $22.7 billion $20.6 billion $21.2 billion Earnings From
Operations $1.5 billion $1.3 billion $1.3 billion Operating Margin
6.7% 6.1% 6.0%
- Optum second quarter 2017 revenues grew
year-over-year by $2 billion or 9.9 percent, and operating margins
improved 60 basis points year-over-year to 6.7 percent. Second
quarter earnings from operations increased by double-digit
percentage rates for all reporting segments, and overall earnings
from operations grew $259 million or 20.5 percent year-over-year to
$1.5 billion.
- OptumHealth second quarter revenues of $5.1
billion grew $1.1 billion or 26 percent year-over-year, driven by
growth in care delivery, as well as behavioral health services and
health financial services. Across its business OptumHealth served
approximately 89 million consumers, or 9 million more individuals
over the past year, and average revenue per consumer increased 13.3
percent year-over-year, driven by the growth in care delivery.
- OptumInsight revenues grew 13.1 percent
year-over-year to $2.0 billion in second quarter 2017, driven by
growth in revenue management and business process services.
OptumInsight contract backlog grew by $2.1 billion or 18.6 percent
year-over-year, ending the quarter at $13.4 billion.
- OptumRx
second quarter 2017 revenues grew 5.1 percent year-over-year to
$15.8 billion. OptumRx fulfilled 322 million adjusted scripts in
second quarter 2017, an increase of 16 million scripts or 5.2
percent over the prior year.
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 August 1, 2017. The conference call replay can also be
accessed by dialing 1-800-727-5306. This earnings release and the
Form 8-K dated July 18, 2017 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 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 Three and Six Months
Ended June 30, 2017 - 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 GROUPCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(in millions, except per share
data)(unaudited)
Three Months Ended
June 30, Six Months Ended June 30, 2017
2016 2017 2016 Revenues Premiums $
39,585 $ 36,413 $ 78,523 $ 71,224 Products 6,415 6,610 12,544
13,003 Services 3,797 3,269 7,231 6,409 Investment and other income
256 193 478 376
Total revenues 50,053 46,485
98,776 91,012
Operating costs Medical costs 32,549 29,872 64,628 58,302
Operating costs 7,328 6,793 14,350 13,551 Cost of products sold
5,889 6,106 11,565 11,983 Depreciation and amortization 556
511 1,089 1,013
Total operating costs 46,322 43,282
91,632 84,849
Earnings
from operations 3,731 3,203 7,144 6,163 Interest expense
(301 ) (271 ) (584 ) (530 )
Earnings before income taxes 3,430 2,932 6,560 5,633
Provision for income taxes (1,080 ) (1,172 )
(2,019 ) (2,246 )
Net earnings 2,350 1,760
4,541 3,387 Earnings attributable to noncontrolling
interests (66 ) (6 ) (85 ) (22 )
Net earnings attributable to
UnitedHealth Group common shareholders
$ 2,284 $ 1,754 $ 4,456 $ 3,365
Diluted earnings per share attributable
to UnitedHealth Group common shareholders
$ 2.32 $ 1.81 $ 4.55 $ 3.48
Adjusted earnings per share
attributable to UnitedHealth Group common shareholders (a)
$ 2.46 $ 1.96 $ 4.83 $ 3.77
Diluted weighted-average common shares outstanding 985
967 980 967
(a)See page 6 for a reconciliation of the non-GAAP measure
UNITEDHEALTH GROUPCONDENSED CONSOLIDATED BALANCE
SHEETS(in millions)(unaudited)
June
30,2017 December 31,2016 Assets
Cash and short-term investments $ 17,970 $ 13,275 Accounts
receivable, net 10,538 8,152 Other current assets 12,731
12,452 Total current assets 41,239 33,879
Long-term investments 26,397 23,868 Other long-term assets
70,461 65,063 Total assets $ 138,097 $ 122,810
Liabilities, redeemable noncontrolling interests and
equity Medical costs payable $ 17,710 $ 16,391 Commercial paper
and current maturities of long-term debt 5,739 7,193 Other current
liabilities 33,672 25,668 Total current
liabilities 57,121 49,252 Long-term debt, less current
maturities 26,197 25,777 Other long-term liabilities 7,786 7,592
Redeemable noncontrolling interests 1,657 2,012 Equity
45,336 38,177 Total liabilities, redeemable
noncontrolling interests and equity $ 138,097 $ 122,810
UNITEDHEALTH GROUPCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(in millions)(unaudited)
Six Months
Ended
June 30,
2017 2016 Operating Activities Net earnings $
4,541 $ 3,387 Noncash items: Depreciation and amortization 1,089
1,013 Deferred income taxes and other (89 ) (161 ) Share-based
compensation 332 262 Net changes in operating assets and
liabilities 2,754 (500 ) Cash flows from
operating activities 8,627 4,001
Investing Activities Purchases of investments, net of sales
and maturities (2,082 ) (3,581 ) Purchases of property, equipment
and capitalized software (925 ) (813 ) Cash paid for acquisitions,
net (704 ) (2,035 ) Other, net 55 16
Cash flows used for investing activities (3,656 )
(6,413 )
Financing Activities Common share
repurchases (1,045 ) (980 ) Dividends paid (1,320 ) (1,071 ) Net
change in commercial paper and long-term debt (2,171 ) 1,008 Other,
net 3,724 684 Cash flows used for
financing activities (812 ) (359 ) Effect of exchange
rate changes on cash and cash equivalents (7 ) 65
Increase (decrease) in cash and cash equivalents 4,152
(2,706 ) Cash and cash equivalents, beginning of period
10,430 10,923 Cash and cash equivalents, end
of period $ 14,582 $ 8,217
Supplemental
Schedule of Noncash Investing Activities Common stock issued
for acquisitions $ 1,867 $ -
UNITEDHEALTH
GROUPSUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES(in
millions, except percentages)(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016 Revenues
UnitedHealthcare $ 40,788 $ 37,556 $ 80,924 $ 73,456 Optum 22,671
20,623 43,908 40,307 Eliminations (13,406 ) (11,694 )
(26,056 ) (22,751 ) Total consolidated
revenues $ 50,053 $ 46,485 $ 98,776 $ 91,012
Earnings from Operations UnitedHealthcare $
2,211 $ 1,942 $ 4,345 $ 3,796 Optum (a) 1,520
1,261 2,799 2,367 Total
consolidated earnings from operations $ 3,731 $ 3,203
$ 7,144 $ 6,163
Operating Margin
UnitedHealthcare 5.4 % 5.2 % 5.4 % 5.2 % Optum 6.7 % 6.1 % 6.4 %
5.9 % Consolidated operating margin 7.5 % 6.9 % 7.2 % 6.8 %
Revenues UnitedHealthcare Employer &
Individual $ 12,966 $ 13,509 $ 25,705 $ 26,329 UnitedHealthcare
Medicare & Retirement 16,747 14,294 33,299 28,359
UnitedHealthcare Community & State 9,178 8,263 18,127 15,991
UnitedHealthcare Global 1,897 1,490 3,793 2,777 OptumHealth
$ 5,122 $ 4,065 $ 9,855 $ 8,063 OptumInsight 1,993 1,762 3,836
3,429 OptumRx 15,840 15,073 30,787 29,346 Optum eliminations (284 )
(277 ) (570 ) (531 )
(a)
Earnings from operations for Optum for the three and six months
ended June 30, 2017 included $422 and $754 for OptumHealth; $372
and $666 for OptumInsight; and $726 and $1,379 for OptumRx,
respectively. Earnings from operations for Optum for the three and
six months ended June 30, 2016 included $304 and $604 for
OptumHealth; $333 and $579 for OptumInsight; and $624 and $1,184
for OptumRx, respectively.
UNITEDHEALTH
GROUPSUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS
METRICS UNITEDHEALTHCARE
CUSTOMER PROFILE(in thousands) People
Served June 30,
2017
March 31,
2017
December 31,
2016
June 30,
2016
Commercial group: Risk-based 7,765 7,695 7,470 7,175
Fee-based 19,110 19,155 18,900 18,935
Total commercial group 26,875 26,850 26,370 26,110 Individual 540
585 1,350 1,520 Fee-based TRICARE 2,855 2,860
2,860 2,855
Total Commercial 30,270
30,295 30,580 30,485 Medicare Advantage
4,340 4,305 3,630 3,550 Medicaid 6,380 6,200 5,890 5,675 Medicare
Supplement (Standardized) 4,360 4,350 4,265
4,215
Total Public and Senior 15,080
14,855 13,785 13,440
Total UnitedHealthcare
- Domestic Medical 45,350 45,150 44,365 43,925 International
4,115 4,165 4,220 4,050
Total
UnitedHealthcare - Medical 49,465 49,315
48,585 47,975
Supplemental Data
Medicare Part D stand-alone 4,935 4,955 4,930
4,940
OPTUM PERFORMANCE METRICS June
30,
2017
March 31,
2017
December 31,
2016
June 30,
2016
OptumHealth Consumers Served (in millions) 89 85 83 80
OptumInsight Contract Backlog (in billions) $ 13.4 $ 13.1 $ 12.6 $
11.3 OptumRx Quarterly Adjusted Scripts (in millions) 322 322 318
306 Note: UnitedHealth Group served 139 million unique
individuals across all businesses at June 30, 2017.
UNITEDHEALTH GROUPRECONCILIATION OF NON-GAAP FINANCIAL
MEASUREADJUSTED NET EARNINGS PER SHARE (a)(in millions,
except per share data)(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Projected
Year Ended
December 31,
2017 2016 2017 2016 2017 GAAP
net earnings $ 2,284 $ 1,754 $ 4,456 $ 3,365 $9,050 to $9,200
Intangible amortization 220 223 439 438 ~890 Tax effect of
intangible amortization (81 ) (83 ) (163 )
(158 ) ~(330) Adjusted net earnings $ 2,423 $ 1,894
$ 4,732 $ 3,645 $9,600 to $9,750 GAAP
diluted earnings per share $ 2.32 $ 1.81 $ 4.55 $ 3.48 $9.20 to
$9.35 Intangible amortization per share 0.22 0.23 0.45 0.45 ~0.90
Tax effect of intangible amortization per share (0.08 )
(0.08 ) (0.17 ) (0.16 ) ~(0.35) Adjusted
diluted earnings per share $ 2.46 $ 1.96 $ 4.83
$ 3.77 $9.75 to $9.90
(a)
GAAP and adjusted net earnings are attributable to UnitedHealth
Group common shareholders.
Use of Non-GAAP
Financial Measure 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. 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.
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UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice
PresidentJohn S. Penshorn, 952-936-7214Senior Vice
PresidentorMedia:Tyler Mason, 424-333-6122Vice President
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