Document/ExhibitDescriptionPagesSize 1: 10-Q Quarterly Report HTML 1.59M
2: EX-31.1 Certification -- §302 - SOA'02 HTML 27K
3: EX-32.1 Certification -- §906 - SOA'02 HTML 20K
9: R1 Document and Entity Information Document HTML 71K
10: R2 Condensed Consolidated Balance Sheets HTML 160K
11: R3 Condensed Consolidated Statements of Operations HTML 122K
12: R4 Condensed Consolidated Statements of Comprehensive HTML 68K
Income
13: R5 Condensed Consolidated Statements of Changes in HTML 117K
Equity
14: R6 Condensed Consolidated Statements of Cash Flows HTML 105K
15: R7 Basis of Presentation (Notes) HTML 21K
16: R8 Investments (Notes) HTML 138K
17: R9 Fair Value (Notes) HTML 92K
18: R10 Medical Costs Payable (Notes) HTML 33K
19: R11 Short-Term Borrowings and Long-Term Debt (Notes) HTML 27K
20: R12 Dividends (Notes) HTML 29K
21: R13 Commitments and Contingencies (Notes) HTML 25K
22: R14 Business Combinations (Notes) HTML 40K
23: R15 Segment Financial Information (Notes) HTML 214K
24: R16 Pay vs Performance Disclosure HTML 30K
25: R17 Insider Trading Arrangements HTML 23K
26: R18 Basis of Presentation (Policies) HTML 27K
27: R19 Investments (Policies) HTML 21K
28: R20 Investments (Tables) HTML 137K
29: R21 Fair Value (Tables) HTML 93K
30: R22 Medical Costs Payable (Tables) HTML 33K
31: R23 Short-Term Borrowings and Long-Term Debt (Tables) HTML 33K
32: R24 Dividends (Tables) HTML 24K
33: R25 Business Combinations (Tables) HTML 40K
34: R26 Segment Financial Information (Tables) HTML 210K
35: R27 Basis of Presentation (Details) HTML 31K
36: R28 Investments (Narrative) (Details) HTML 26K
37: R29 Investments (Short-Term and Long-Term Investments) HTML 92K
(Details)
38: R30 Investments (Amortized Cost and Fair Value of HTML 106K
Available-for-Sale Debt Securities by Contractual
Maturity) (Details)
39: R31 Investments (Fair Value of Available-For-Sale HTML 77K
Investments with Gross Unrealized Losses by
Investment Type and Length of Time That Individual
Securities Have Been in a Continuous Unrealized
Loss Position) (Details)
40: R32 Fair Value (Narrative) (Details) HTML 24K
41: R33 Fair Value (Financial Assets and Liabilities HTML 76K
Measured at Fair Value on a Recurring Basis)
(Details)
42: R34 Fair Value (Financial Assets and Liabilities, Not HTML 41K
Measured at Fair Value on a Recurring Basis)
(Details)
43: R35 Medical Costs Payable (Narrative) (Details) HTML 19K
44: R36 Medical Costs Payable (Details) HTML 39K
45: R37 Short-Term Borrowings and Long-Term Debt (Details) HTML 38K
46: R38 Short-Term Borrowings and Long-Term Debt HTML 31K
(Narrative) (Details)
47: R39 Dividends (Details) HTML 22K
48: R40 Commitments and Contingencies (Narrative) HTML 21K
(Details)
49: R41 Business Combinations (Narrative) (Details) HTML 19K
50: R42 Business Combinations Acquired Assets HTML 49K
(Liabilities) (Details)
51: R43 Business Combinations Acquired Finite-Lived HTML 33K
Intangible Asets (Details)
52: R44 Segment Financial Information (Narrative) HTML 33K
(Details)
53: R45 Segment Financial Information (Details) HTML 127K
56: XML IDEA XML File -- Filing Summary XML 103K
54: XML XBRL Instance -- unh-20230930_htm XML 2.08M
55: EXCEL IDEA Workbook of Financial Report Info XLSX 98K
5: EX-101.CAL XBRL Calculations -- unh-20230930_cal XML 184K
6: EX-101.DEF XBRL Definitions -- unh-20230930_def XML 491K
7: EX-101.LAB XBRL Labels -- unh-20230930_lab XML 1.33M
8: EX-101.PRE XBRL Presentations -- unh-20230930_pre XML 798K
4: EX-101.SCH XBRL Schema -- unh-20230930 XSD 87K
57: JSON XBRL Instance as JSON Data -- MetaLinks 461± 675K
58: ZIP XBRL Zipped Folder -- 0000731766-23-000064-xbrl Zip 283K
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading Symbol(s)
Name of each exchange on which registered
iCommon Stock, $.01 par value
iUNH
iNew
York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYes☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYes☒ No ☐
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act
iLarge
accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging
growth company
i☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐No ☒
As of October 31, 2023, there were i924,925,293
shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. iBasis
of Presentation
iUnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and the “Company”) is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary business platforms — Optum and UnitedHealthcare — are working to help build a modern, high-performing health system through improved access, affordability, outcomes and experiences for the individuals and organizations the
Company is privileged to serve.
iThe Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S.
Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC (2022 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.
Use
of Estimates
iThese Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates relate to estimates and judgments for medical costs payable and goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the
period in which the estimate is adjusted.
Revenues - Products and Services
iAs of September 30, 2023 and December 31, 2022, accounts receivable related to products and services were $i8.0 billion
and $i7.1 billion, respectively. As of September 30, 2023, revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts having an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts
with variable consideration related to undelivered performance obligations, was $i11.8 billion, of which approximately half is expected to be recognized in the next ithree years./
The
Company held $i4.2 billion and $i3.7 billion of equity securities as of September 30,
2023 and December 31, 2022, respectively. The Company’s investments in equity securities primarily consist of employee savings plan related investments, venture investments and shares of Brazilian real denominated fixed-income funds with readily determinable fair values. Additionally, the Company’s investments included $i1.4 billion and $i1.5
billion of equity method investments in operating businesses in the health care sector as of September 30, 2023 and December 31, 2022, respectively. The allowance for credit losses on held-to-maturity securities at September 30, 2023 and December 31, 2022 was not material.
The
amortized cost and fair value of debt securities as of September 30, 2023, by contractual maturity, were as follows:
Available-for-Sale
Held-to-Maturity
(in
millions)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Due in one year or less
$
i5,372
$
i5,340
$
i375
$
i372
Due
after one year through five years
i15,098
i14,183
i262
i255
Due
after five years through ten years
i11,256
i9,898
i25
i24
Due
after ten years
i5,219
i4,690
i20
i16
U.S.
agency mortgage-backed securities
i8,632
i7,474
—
—
Non-U.S.
agency mortgage-backed securities
i3,091
i2,767
—
—
Total
debt securities
$
i48,668
$
i44,352
$
i682
$
i667
/i
The
fair value of available-for-sale debt securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:
The
Company’s unrealized losses from debt securities as of September 30, 2023 were generated from approximately i37,000 positions out of a total of i41,000
positions. The Company believes that it will timely collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities which impacted the Company’s assessment on collectability of principal and interest. iAt each reporting period, the Company evaluates available-for-sale
debt securities for any credit-related impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the expected cash flows, the underlying credit quality and credit ratings of the issuers, noting no significant credit deterioration since purchase. As of September 30, 2023, the Company did not have the intent to sell any of the available-for-sale debt securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary. The allowance for credit losses on available-for-sale debt securities at September 30, 2023 and December 31,
2022 was not material.
Certain assets and liabilities are measured at fair value in the Condensed Consolidated Financial Statements or have fair values disclosed in
the Notes to the Condensed Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.
For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2022 10-K.
i
The
following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:
The following table presents a summary of fair value measurements by level and carrying values for certain financial instruments not measured at fair value on a recurring
basis in the Condensed Consolidated Balance Sheets:
Nonfinancial
assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were iino/
significant fair value adjustments for these assets and liabilities recorded during the nine months ended September 30, 2023 or 2022.
4. iMedical Costs Payable
i
The
following table shows the components of the change in medical costs payable for the nine months ended September 30:
(in millions)
2023
2022
Medical costs payable, beginning of period
$
i29,056
$
i24,483
Acquisitions
i1
i177
Reported
medical costs:
Current year
i180,423
i157,601
Prior
years
(i760)
(i350)
Total
reported medical costs
i179,663
i157,251
Medical
payments:
Payments for current year
(i149,671)
(i130,788)
Payments
for prior years
(i26,257)
(i22,059)
Total
medical payments
(i175,928)
(i152,847)
Medical
costs payable, end of period
$
i32,792
$
i29,064
/
For
the nine months ended September 30, 2023 and 2022, prior years’ medical cost reserve development included no individual factors that were significant. Medical costs payable included reserves for claims incurred by consumers but not yet reported to the Company of $i22.7 billion and $i20.0
billion at September 30, 2023 and December 31, 2022, respectively.
5. iShort-Term Borrowings and Long-Term Debt
i
In
March 2023, the Company issued $i6.5 billion of senior unsecured notes consisting of the following:
(in millions, except percentages)
Par Value
i4.250%
notes due January 2029
$
i1,250
i4.500% notes
due April 2033
i1,500
i5.050% notes due April 2053
i2,000
i5.200%
notes due April 2063
i1,750
/
As of September 30, 2023, the Company had $i2.6
billion of commercial paper outstanding, with a weighted-average annual interest rate of i5.3%.
For more information on the Company’s short-term borrowings, debt covenants and long-term debt, see Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2022 10-K.
In June 2023, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual rate of $7.52 compared to $6.60 per share, which the Company had paid since June 2022. Declaration and payment of future quarterly dividends
is at the discretion of the Board of Directors and may be adjusted as business needs or market conditions change.
i
The following table provides details of the Company’s dividend payments during the nine months ended September 30, 2023:
Payment
Date
Amount per Share
Total Amount Paid
(in millions)
March 21
$
i1.65
$
i1,537
June
27
i1.88
i1,747
September
19
i1.88
i1,739
/
7. iCommitments
and Contingencies
Pending Acquisitions
iAs of September 30, 2023, the Company has entered into agreements to acquire companies in the health care sector, subject to regulatory approval and other customary closing conditions. The total anticipated consideration required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $i5
billion.
Legal Matters
The Company is frequently made party to a variety of legal actions and regulatory inquiries, including class actions and suits brought by members, care providers, consumer advocacy organizations, customers and regulators, relating to the Company’s businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits coverage and other business practices.
The
Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a change in business practices. Accordingly, the Company is often unable to estimate the losses or ranges of losses for those matters where there is a reasonable possibility or it is probable a loss may be incurred.
Government
Investigations, Audits and Reviews
The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, state attorneys general, the Office of the Inspector General, the Office of Personnel Management, the Office of Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau (CFPB), the Defense Contract
Audit Agency and other governmental authorities. Similarly, the Company’s international businesses are also subject to investigations, audits and reviews by applicable foreign governments, including South American and other non-U.S. governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments
to payments made to the Company’s health plans.
On February 14, 2017, the DOJ announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges the Company made improper risk adjustment submissions and violated the False Claims Act. On February 12, 2018, the court granted in part and denied in part the
Company’s motion to dismiss. In May 2018, the DOJ moved to dismiss the Company’s counterclaims, which were filed in March 2018, and moved for partial summary judgment. In March 2019, the court denied the government’s motion for partial summary judgment and dismissed the Company’s counterclaims without prejudice. The Company cannot reasonably estimate the outcome which may result from this matter given its procedural status.
During the nine months ended September 30, 2023, the Company completed several business combinations for total consideration of $i8.4
billion.
iAcquired assets (liabilities) at acquisition date were:
(in millions)
Cash and cash equivalents
$
i104
Accounts
receivable and other current assets
i587
Property, equipment and other long-term assets
i573
Other
intangible assets
i1,800
Total identifiable assets acquired
i3,064
Medical
costs payable
(i1)
Accounts payable and other current liabilities
(i551)
Other
long-term liabilities
(i661)
Total identifiable liabilities acquired
(i1,213)
Total
net identifiable assets
i1,851
Goodwill
i8,073
Redeemable
noncontrolling interests
(i121)
Nonredeemable noncontrolling interests
(i1,339)
Net
assets acquired
$
i8,464
/
The majority of goodwill
is not deductible for income tax purposes. The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent liabilities, are finalized.
iThe acquisition date fair values and weighted-average useful lives assigned to intangible assets were:
(in
millions, except years)
Fair Value
Weighted-Average Useful Life
Acquired finite-lived intangible assets:
Customer-related
$
i223
i12
years
Trademarks and technology
i171
i5
years
Other
i42
i6
years
Total acquired finite-lived intangible assets
i436
i9
years
Total acquired indefinite-lived intangible assets - operating licenses and certificates
i1,364
Total acquired intangible assets
$
i1,800
/
The
results of operations and financial condition of acquired entities have been included in the Company’s consolidated results and the results of the corresponding operating segment as of the date of acquisition. Through September 30, 2023, acquired entities’ impact on revenues and net earnings was not material.
Unaudited pro forma revenues and net earnings for the nine months ended September 30, 2023 and 2022, as if the business combinations had occurred on January 1, 2022, were immaterial for both periods.
The Company’s ifour reportable segments are UnitedHealthcare,
Optum Health, Optum Insight and Optum Rx. For more information on the Company’s segments, see Part I, Item I, “Business” and Note 14 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2022 10-K. Total assets at Optum Health increased to $i86.9 billion as of September 30, 2023 compared to $i69.0
billion as of December 31, 2022, including an increase to goodwill from business combinations of $i7.3 billion.
i
The following tables present reportable
segment financial information:
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our 2022 10-K, including the Consolidated Financial Statements and Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” the “Company,”“we,”“our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to UnitedHealth Group Incorporated and its consolidated subsidiaries.
Readers
are cautioned that the statements, estimates, projections or outlook contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including discussions regarding financial prospects, economic conditions, trends and uncertainties contained in this Item 2, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed or implied in the forward-looking statements. A description of some of the risks and uncertainties is set forth in Part I, Item 1A, “Risk Factors” in our 2022 10-K and in the discussion below.
EXECUTIVE OVERVIEW
General
UnitedHealth
Group is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary business platforms — Optum and UnitedHealthcare — are working to help build a modern, high-performing health system through improved access, affordability, outcomes and experiences for the individuals and organizations we are privileged to serve.
We have four reportable segments:
•Optum Health;
•Optum Insight;
•Optum Rx; and
•UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community &
State.
Further information on our business is presented in Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 10-K and additional information on our segments can be found in this Item 2 and in Note 9 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Business Trends
Our businesses participate in the United States, South America and certain other international health markets. We expect overall spending on health care to continue
to grow in the future due to inflation, medical technology and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national interest in health and well-being. The rate of market growth may be affected by a variety of factors, including macroeconomic conditions and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.
Pricing Trends. To price our health care benefits, products and services, we start with our view of expected future costs, including medical cost trends, inflation and labor market dynamics. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio thresholds
and similar revenue adjustments. We will continue seeking to balance growth and profitability across all these dimensions.
The commercial risk market remains highly competitive in the small group, large group and individual segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs.
Government programs in the community and senior sector tend to receive lower rates of increase than the commercial market due to governmental budget pressures and lower cost trends.
Medical Cost Trends. Our
medical cost trends primarily relate to changes in unit costs, care activity and prescription drug costs. During the third quarter we continued to observe increased care patterns, primarily related to outpatient procedures for seniors, consistent with the levels observed in the second quarter, and which may continue in future periods. We endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve quality, affordable care.
Medicaid Redeterminations. The majority of states have resumed Medicaid redeterminations, which have impacted the number of people served through our Medicaid offerings, partially offset by an increase in consumers served through our commercial offerings as we endeavor to ensure that people and families have continued access to benefits.
Regulatory
Trends and Uncertainties
Medicare Advantage Rates. Medicare Advantage rate notices over the years have at times resulted in industry base rates well below industry forward medical trend. For example, the Final Notice for 2024 rates resulted in an industry base rate decrease, well short of what is an increasing industry forward medical cost trend, creating continued pressure in the Medicare Advantage program. Further, substantial revisions to the risk adjustment model, which serves to adjust rates to reflect a patient’s health status and care resource needs, will result in reduced funding and potentially benefits for people, especially those with some of the greatest health and social challenges.
As a result of ongoing Medicare funding pressures, there are adjustments we can make to partially offset these rate pressures and reductions for a particular period.
For example, we can seek to intensify our medical and operating cost management, make changes to the size and composition of our care provider networks, adjust member benefits and implement or increase the member premiums supplementing the monthly payments we receive from the government. Additionally, we decide annually on a county-by-county basis where we will offer Medicare Advantage plans.
SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS
The following summarizes select third quarter 2023 year-over-year operating comparisons to third quarter 2022 and other financial results.
•UnitedHealthcare
served 1.5 million more people, driven by growth across each of our businesses.
•Consolidated earnings from operations of $8.5 billion compared to $7.5 billion last year, including growth of 21% at UnitedHealthcare and 7% at Optum.
•Diluted earnings per common share were $6.24.
•Cash flows from operations for the nine months ended September 30, 2023 were $34.3 billion.
The following table summarizes our consolidated results of operations and other financial information:
(in
millions, except percentages and per share data)
Three Months Ended September 30,
Increase/(Decrease)
Nine Months Ended September 30,
Increase/(Decrease)
2023
2022
2023 vs. 2022
2023
2022
2023
vs. 2022
Revenues:
Premiums
$
72,339
$
64,491
$
7,848
12
%
$
217,599
$
192,457
$
25,142
13
%
Products
10,354
9,190
1,164
13
31,272
28,026
3,246
12
Services
8,671
6,700
1,971
29
25,414
19,717
5,697
29
Investment
and other income
997
513
484
94
2,910
1,175
1,735
148
Total revenues
92,361
80,894
11,467
14
277,195
241,375
35,820
15
Operating
costs:
Medical costs
59,550
52,635
6,915
13
179,663
157,251
22,412
14
Operating
costs
13,855
11,663
2,192
19
41,289
34,773
6,516
19
Cost of products sold
9,423
8,306
1,117
13
28,576
25,389
3,187
13
Depreciation
and amortization
1,007
828
179
22
2,998
2,418
580
24
Total operating costs
83,835
73,432
10,403
14
252,526
219,831
32,695
15
Earnings
from operations
8,526
7,462
1,064
14
24,669
21,544
3,125
15
Interest expense
(834)
(516)
(318)
62
(2,416)
(1,416)
(1,000)
71
Earnings
before income taxes
7,692
6,946
746
11
22,253
20,128
2,125
11
Provision for income taxes
(1,654)
(1,562)
(92)
6
(4,784)
(4,397)
(387)
9
Net
earnings
6,038
5,384
654
12
17,469
15,731
1,738
11
Earnings attributable to noncontrolling
interests
(197)
(122)
(75)
61
(543)
(372)
(171)
46
Net earnings attributable to UnitedHealth
Group common shareholders
$
5,841
$
5,262
$
579
11
%
$
16,926
$
15,359
$
1,567
10
%
Diluted
earnings per share attributable to UnitedHealth Group common shareholders
$
6.24
$
5.55
$
0.69
$
18.01
$
16.15
$
1.86
Medical
care ratio (a)
82.3
%
81.6
%
0.7
%
82.6
%
81.7
%
0.9
%
Operating
cost ratio
15.0
14.4
0.6
14.9
14.4
0.5
Operating margin
9.2
9.2
—
8.9
8.9
—
Tax
rate
21.5
22.5
(1.0)
21.5
21.8
(0.3)
Net earnings margin (b)
6.3
6.5
(0.2)
6.1
6.4
(0.3)
Return
on equity (c)
28.0
%
28.5
%
(0.5)
%
27.7
%
28.1
%
(0.4)
%
(a)Medical
care ratio (MCR) is calculated as medical costs divided by premium revenue.
(b)Net earnings margin attributable to UnitedHealth Group shareholders.
(c)Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.
2023 RESULTS OF OPERATIONS COMPARED TO 2022 RESULTS OF OPERATIONS
Consolidated Financial Results
Revenues
The increases in revenues were primarily driven
by growth in the number of people served through Medicare Advantage and Medicaid, pricing trends and growth across the Optum businesses. Revenues also increased due to increased investment income, primarily driven by increased interest rates.
Medical Costs and MCR
Medical costs increased primarily due to growth in people served through Medicare Advantage and Medicaid. The MCR increased as a result of elevated care activity, primarily relating to outpatient care for seniors, and business mix.
Operating Cost Ratio
The operating cost ratio increased primarily due to business mix and investments to support future growth, partially offset by continued productivity advances.
See Note 9 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on our segments. We utilize various metrics to evaluate and manage our reportable segments, including people served by UnitedHealthcare by major market segment and funding arrangement, people served by Optum Health and adjusted scripts for Optum Rx. These metrics are the main drivers of revenue, earnings and cash flows at each business. The metrics also allow management and investors to evaluate and understand business mix, including the level and scope of services provided to people, and pricing trends when comparing the metrics to revenue by segment.
The
following table presents a summary of the reportable segment financial information:
Three
Months Ended September 30,
Increase/ (Decrease)
Nine Months Ended September 30,
Increase/ (Decrease)
(in millions, except percentages)
2023
2022
2023 vs. 2022
2023
2022
2023
vs. 2022
Revenues
UnitedHealthcare
$
69,853
$
61,995
$
7,858
13
%
$
210,552
$
186,695
$
23,857
13
%
Optum
Health
23,864
18,463
5,401
29
70,785
52,728
18,057
34
Optum Insight
4,977
3,693
1,284
35
14,147
10,194
3,953
39
Optum
Rx
28,857
25,203
3,654
14
84,921
73,919
11,002
15
Optum eliminations
(961)
(800)
(161)
20
(2,713)
(1,941)
(772)
40
Optum
56,737
46,559
10,178
22
167,140
134,900
32,240
24
Eliminations
(34,229)
(27,660)
(6,569)
24
(100,497)
(80,220)
(20,277)
25
Consolidated
revenues
$
92,361
$
80,894
$
11,467
14
%
$
277,195
$
241,375
$
35,820
15
%
Earnings
from operations
UnitedHealthcare
$
4,592
$
3,799
$
793
21
%
$
13,293
$
11,447
$
1,846
16
%
Optum
Health
1,568
1,575
(7)
—
4,869
4,340
529
12
Optum Insight
1,109
1,007
102
10
2,984
2,693
291
11
Optum
Rx
1,257
1,081
176
16
3,523
3,064
459
15
Optum
3,934
3,663
271
7
11,376
10,097
1,279
13
Consolidated
earnings from operations
$
8,526
$
7,462
$
1,064
14
%
$
24,669
$
21,544
$
3,125
15
%
Operating
margin
UnitedHealthcare
6.6
%
6.1
%
0.5
%
6.3
%
6.1
%
0.2
%
Optum
Health
6.6
8.5
(1.9)
6.9
8.2
(1.3)
Optum Insight
22.3
27.3
(5.0)
21.1
26.4
(5.3)
Optum
Rx
4.4
4.3
0.1
4.1
4.1
—
Optum
6.9
7.9
(1.0)
6.8
7.5
(0.7)
Consolidated
operating margin
9.2
%
9.2
%
—
%
8.9
%
8.9
%
—
%
UnitedHealthcare
The
following table summarizes UnitedHealthcare revenues by business:
The following table summarizes the number of people served by our UnitedHealthcare businesses, by major market segment and funding arrangement:
September 30,
Increase/(Decrease)
(in
thousands, except percentages)
2023
2022
2023 vs. 2022
Commercial - Domestic:
Risk-based
8,120
8,055
65
1
%
Fee-based
19,130
18,500
630
3
Total
Commercial - Domestic
27,250
26,555
695
3
Medicare Advantage
7,645
7,035
610
9
Medicaid
8,065
8,005
60
1
Medicare
Supplement (Standardized)
4,345
4,370
(25)
(1)
Total Community and Senior
20,055
19,410
645
3
Total
UnitedHealthcare - Domestic Medical
47,305
45,965
1,340
3
Commercial - Global
5,475
5,360
115
2
Total
UnitedHealthcare - Medical
52,780
51,325
1,455
3
%
Supplemental Data:
Medicare Part D stand-alone
3,335
3,310
25
1
%
UnitedHealthcare’s
revenues increased due to growth in the number of people served through individual and group Medicare Advantage plans; growth in people served with higher acuity needs partially offset by Medicaid redeterminations; and an increase in the number of people served through commercial offerings. Earnings from operations increased due to increased investment income and the factors impacting revenue, partially offset by elevated care activity, primarily relating to outpatient care for seniors.
Optum
Total revenues and earnings from operations increased due to growth across the Optum businesses. The results by segment were as follows:
Optum Health
Revenues at Optum Health increased primarily due to organic growth in patients served under value-based care arrangements and business combinations. For the nine
months ended September 30, 2023, earnings from operations increased, while remaining consistent for the three months ended September 30, 2023, due to cost management initiatives and increased investment income, offset by higher senior outpatient and behavioral health care activity, costs associated with serving newly added patients under value-based care arrangements and decreased asset dispositions. Optum Health served approximately 103 million people as of September 30, 2023 compared to 101 million people as of September 30, 2022.
Optum Insight
Revenues and earnings from operations at Optum Insight increased due to growth in business services as a result of business combinations and
growth in technology services.
Optum Rx
Revenues and earnings from operations at Optum Rx increased due to growth in pharmacy offerings and higher script volumes from both new clients and growth in existing clients. Earnings from operations also increased as a result of continued supply chain and operating cost management initiatives. Optum Rx fulfilled 383 million and 359 million adjusted scripts in the third quarters of 2023 and 2022, respectively.
LIQUIDITY,
FINANCIAL CONDITION AND CAPITAL RESOURCES
Liquidity
Summary of our Major Sources and Uses of Cash and Cash Equivalents
Nine Months Ended September 30,
Increase/(Decrease)
(in
millions)
2023
2022
2023 vs. 2022
Sources of cash:
Cash provided by operating activities
$
34,261
$
30,739
$
3,522
Issuances
of short-term borrowings and long-term debt, net of repayments
5,848
3,806
2,042
Proceeds from common stock issuances
1,039
1,084
(45)
Customer funds administered
2,037
7,028
(4,991)
Other
—
50
(50)
Total
sources of cash
43,185
42,707
Uses of cash:
Common stock repurchases
(6,500)
(6,000)
(500)
Cash
paid for acquisitions, net of cash assumed
(8,389)
(7,154)
(1,235)
Purchases of investments, net of sales and maturities
(2,850)
(4,067)
1,217
Purchases of property, equipment and capitalized software
(2,427)
(1,936)
(491)
Cash
dividends paid
(5,023)
(4,450)
(573)
Other
(2,495)
(1,634)
(861)
Total uses of cash
(27,684)
(25,241)
Effect
of exchange rate changes on cash and cash equivalents
49
4
45
Net increase in cash and cash equivalents
$
15,550
$
17,470
$
(1,920)
2023
Cash Flows Compared to 2022 Cash Flows
Increased cash flows provided by operating activities were primarily driven by increased net earnings and the receipt of our October CMS premium payment of $11.9 billion and $9.8 billion in September 2023 and 2022, respectively. Other significant changes in sources or uses of cash year-over-year included increased net issuances of short-term borrowings and long-term debt and decreased net purchases of investments, partially offset by decreased customer funds administered, primarily driven by Medicare Part D timing, and increased cash paid for acquisitions.
Financial Condition
As of September 30, 2023, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of $87.5 billion included approximately $38.9 billion of cash
and cash equivalents (of which $1.5 billion was available for general corporate use), $44.4 billion of debt securities and $4.2 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt securities portfolio had a weighted-average duration of 3.8 years and a weighted-average credit rating of “Double A” as of September 30, 2023. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.
Capital Resources and Uses of Liquidity
In addition to cash flows from operations and cash and cash
equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:
Cash Requirements. A summary of our cash requirements as of December 31, 2022 was disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 10-K. During the nine months ended September 30, 2023, there were no material changes to this previously disclosed information outside the ordinary course of business. We believe our capital resources are sufficient to meet future, short-term and long-term, liquidity needs. We continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and business combinations.
Short-Term Borrowings. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through independent broker-dealers, and are available for general corporate purposes. For more information on our commercial paper and bank credit facilities, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2022 10-K.
Our revolving bank credit facilities contain various covenants, including covenants requiring
us to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than 60%. As of September 30, 2023, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 38%.
Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item
8, “Financial Statements and Supplementary Data” in our 2022 10-K.
Credit Ratings. Our credit ratings as of September 30, 2023 were as follows:
Moody’s
S&P
Global
Fitch
A.M. Best
Ratings
Outlook
Ratings
Outlook
Ratings
Outlook
Ratings
Outlook
Senior
unsecured debt
A2
Stable
A+
Stable
A
Stable
A
Stable
Commercial paper
P-1
n/a
A-1
n/a
F1
n/a
AMB-1+
n/a
The
availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions, regulatory requirements and economic and market conditions. A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.
Share Repurchase Program. During the nine months ended September 30, 2023, we repurchased approximately 13 million shares at an average price of $485.10 per share. As of September 30, 2023, we had Board of Directors’ authorization to purchase up to 18 million shares of our common stock.
Dividends. In June
2023, the Company’s Board of Directors increased our quarterly cash dividend to shareholders to an annual rate of $7.52 compared to $6.60 per share. For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Pending Acquisitions. As of September 30, 2023, we have entered into agreements to acquire companies in the health care sector, subject to regulatory approval and other customary closing conditions. The total anticipated consideration required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $5 billion.
For
additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2022 10-K.
RECENTLY ISSUED ACCOUNTING STANDARDS
There are no recently issued accounting standards that are expected to have a material impact on our Condensed Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
In preparing our Condensed Consolidated Financial Statements, we are required to make judgments, assumptions and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect certain
of our revenues and expenses and their related balance sheet accounts and disclosure of our contingent liabilities. We base our assumptions and estimates primarily on historical experience and consider known and projected trends. On an ongoing basis, we re-evaluate our selection of assumptions and the method of calculating our estimates. Actual results, however, may materially differ from our calculated estimates, and this difference would be reported in our current operations.
Our critical accounting estimates include medical costs payable and goodwill. For a detailed description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2022 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial
Statements and Supplementary Data” in our 2022 10-K.
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: 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; 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; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; 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 our businesses providing pharmacy care services; competitive pressures, including our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; failure to achieve targeted operating cost productivity improvements; failure to develop and maintain satisfactory relationships with health care payers, physicians, hospitals and other service providers; the impact of potential changes in tax laws and regulations; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to complete, manage or integrate strategic transactions; risks associated with public health crises arising from large-scale medical emergencies, pandemics, natural disasters and other extreme events; failure to attract, develop, retain, and manage the succession of key employees
and executives; our investment portfolio performance; impairment of our goodwill and intangible assets; failure to protect proprietary rights to our databases, software and related products; downgrades in our credit ratings; 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by matching a portion of our floating-rate assets and liabilities, either directly or through the use
of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.
The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of September 30, 2023 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):
Note:
The impact of hypothetical changes in interest rates may not reflect the full 100 or 200 basis point change on interest income and interest expense or on the fair value of financial assets and liabilities as the rates are assumed to not fall below zero.
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our 2022 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2022 10-K are not the
only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
There have been no material changes to the risk factors as disclosed in our 2022 10-K.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Issuer Purchases of Equity Securities (a)
Third Quarter 2023
For
the Month Ended
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number of Shares That May Yet Be Purchased Under The Plans or Programs
(a) In
November 1997, our Board of Directors adopted a share repurchase program, which the Board of Directors evaluates periodically. In June 2018, the Board of Directors renewed our share repurchase program with an authorization to repurchase up to 100 million shares of our common stock in open market purchases or other types of transactions (including prepaid or structured repurchase programs). There is no established expiration date for the program.
During the quarter ended September 30, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) iiadopted/
or iiterminated/ any contract, instruction or written plan for the purchase or sale of Company securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule
10b5-1 trading arrangement.
ITEM 6. EXHIBITS*
The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864.
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101).
________________
*
Pursuant
to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
