During the first quarter of 2020, UnitedHealth Group (NYSE: UNH)
responded to the COVID-19 global health crisis, rapidly redirecting
its business efforts to provide a broad range of critical support
to patients, customers, care providers and communities, while
maintaining full employment for its team members.
"From the outset of the COVID-19 pandemic, our singular priority
has remained clear: the health, safety and support of the people
and communities we serve, including our dedicated team of 325,000
people and the heroic members of the health care workforce, and the
reliability and sustainability of health care delivery systems,”
said David S. Wichmann, chief executive officer of UnitedHealth
Group.
In response to the pandemic, the company continues to mobilize
the full strength of its resources, grounded in clinical expertise,
advanced technologies and health information science, to deliver
the best care for patients, support its members and care provider
partners, and deliver innovative solutions and support for the
communities it serves and the entire health system. An overview
highlighting some of the company’s initial response efforts is
included here. The company will further expand its efforts to
address the ever changing developments related to the COVID-19
crisis as events evolve.
First quarter 2020 net earnings were $3.52 per share and
adjusted net earnings were $3.72 per share. These results reflect
minimal impact from the progression of the COVID-19 virus across
the U.S. given various factors that only emerged late in the
quarter, including: rising U.S. incidence and response initiatives;
multiple investment initiatives including coverage expansions and
increased access to critical care and pharmacy services; other
funding and support initiatives; and lower elective care
demand.
The company maintained its full year earnings per share outlook
for 2020, including net earnings of $15.45 to $15.75 per share and
adjusted net earnings of $16.25 to $16.55 per share. As the year
progresses, the company will continue to evaluate the impact of
COVID-19 across its balanced and diversified businesses.
Separately today, the company announced Andrew Witty, President,
UnitedHealth Group and CEO of Optum, will take a leave of absence
to help lead the World Health Organization’s new initiative for
COVID-19 vaccine development. Witty will return to his positions
upon completion of this temporary assignment.
Quarterly Financial Performance
Three
Months Ended
March 31,
2020
March 31,
2019
December 31,
2019
Revenues
$64.4 billion
$60.3 billion
$60.9 billion
Earnings from Operations
$5.0 billion
$4.8 billion
$5.1 billion
Net Margin
5.2%
5.7%
5.8%
- UnitedHealth Group’s first quarter 2020 revenues grew $4.1
billion or 6.8% to $64.4 billion, reflecting broad-based revenue
growth across Optum and UnitedHealthcare.
- First quarter earnings from operations grew $164 million or
3.4% year-over-year to $5.0 billion. Adjusted net earnings per
share were in line with the same period last year. Both reflected
higher earnings from operations, offset by a higher tax rate from
the return of the health insurance tax and the extra calendar days
this quarter.
- Cash flows from operations were $2.9 billion, or 0.8 times net
income, impacted by timing factors as noted in the fourth quarter
2019.
- The medical care ratio of 81.0% in first quarter 2020 decreased
from 82.0% last year in the same quarter, due primarily to the
return of the health insurance tax, partially offset by the impact
of the extra calendar days. Favorable reserve development was $580
million compared to $300 million in the year ago quarter. Days
claims payable were 50.5 days compared to 48.9 days in the first
quarter 2019 and 50.8 days in the fourth quarter 2019.
- The operating cost ratio of 15.5% in first quarter 2020
increased from 14.1% in the same period last year, primarily due to
the return of the health insurance tax and business mix, partially
offset by productivity improvements.
- Return on equity of 23.6% continued to reflect the company’s
strong overall margin profile. Dividend payments grew 19.1%
year-over-year to $1.0 billion and the company repurchased 6.2
million shares for $1.7 billion in first quarter 2020.
- Corporate cash available was $10.9 billion at the end of the
first quarter 2020 reflecting measures taken to assure strong
liquidity levels in response to financial market volatility
particularly evident in March 2020. As a result, the debt to total
capital ratio was 46.3% to end the quarter. Adjusted for the excess
corporate cash balances, the debt to total capital ratio was
40.5%.
UnitedHealthcare provides 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,
2020
March 31,
2019
December 31,
2019
Revenues
$51.1 billion
$48.9 billion
$48.2 billion
Earnings from Operations
$2.9 billion
$3.0 billion
$2.1 billion
Operating Margin
5.7%
6.0%
4.3%
- UnitedHealthcare first quarter revenues grew by $2.2 billion or
4.4% to $51.1 billion, primarily due to growth in Medicare
Advantage and dual special needs plans. First quarter 2020 earnings
from operations of $2.9 billion were roughly in line with last
year, as expected, and were impacted by the extra calendar days in
this year’s quarter.
- UnitedHealthcare Employer &
Individual first quarter 2020 revenues of $14.3 billion
increased $196 million year-over-year. UnitedHealthcare served 27.0
million people with commercial benefits in first quarter 2020, a
decline of 475,000 from the same quarter last year.
- UnitedHealthcare Medicare &
Retirement revenues grew by $2.1 billion or 9.7% to $23.2
billion in first quarter 2020, as the business grew to serve 5.6
million people in Medicare Advantage at quarter-end, an increase of
410,000 people year-over-year.
- UnitedHealthcare Community &
State revenues grew $271 million to $11.5 billion in the
first quarter 2020, driven by growth in serving more people with
higher acuity needs, such as people dually eligible for Medicare
and Medicaid and participants in long-term services and supports
programs. UnitedHealthcare Community & State served 545,000
fewer people in first quarter 2020 as compared to the same period
last year due to market withdrawals in 2019.
- UnitedHealthcare Global revenues
declined $351 million to $2.2 billion in first quarter 2020,
primarily due to weakening foreign currency.
Optum is a health services business serving the broad health
care marketplace, including payers, care providers, health systems,
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 and physician experience.
Quarterly Financial Performance
Three
Months Ended
March 31,
2020
March 31,
2019
December 31,
2019
Revenues
$32.8 billion
$26.4 billion
$29.8 billion
Earnings from Operations
$2.1 billion
$1.9 billion
$3.0 billion
Operating Margin
6.4%
7.1%
10.1%
- In the first quarter of 2020, Optum revenues grew by $6.5
billion or 24.6% year-over-year to $32.8 billion, including
double-digit revenue growth across each of the three businesses.
Optum’s first quarter 2020 earnings from operations grew $230
million or 12.2% year-over-year to $2.1 billion, led by
OptumInsight and OptumHealth.
- OptumHealth revenues grew $2.5
billion or 36.9% year-over-year to $9.2 billion, with diversified
growth, including strength in care delivery. OptumHealth served
approximately 96 million people at March 31, 2020, up 3 million
people from the prior year, with a 33% increase in revenue per
consumer driven by continued growth in value-based care
arrangements.
- OptumInsight revenues grew 13.9%
to $2.5 billion in first quarter 2020, while revenue backlog grew
10.3% year-over-year to $19.2 billion at quarter end.
- OptumRx revenues in the first
quarter 2020 increased $3.7 billion or 21.0% year-over-year to
$21.6 billion, reflecting new client wins and continued growth in
specialty drugs. OptumRx fulfilled 339 million adjusted scripts in
first quarter 2020, consistent with the same period last year,
despite the effects of a previously announced large client
transition.
COVID-19 Response
Coronavirus (COVID-19) is profoundly impacting the health of
people around the world, as well as our global economies. The
safety and health of the people we serve, our team members, their
families, our stakeholders, broader communities and the reliability
of our health care systems consume our resources and our focus.
Actions we have taken to date include:
Care of Our Team Members
- We are employing and paying full wages to our entire
workforce.
- Team members who have COVID-19, or are subject to a quarantine,
are paid fully and not required to take paid time off. All costs of
COVID-19 are covered fully with no cost sharing.
- Compensation for our front line clinical workforce serving in
high incidence communities was increased.
- Business continuity plans and clinical safety protocols are
engaged fully and effective in keeping team members safe while
serving the needs of our members, patients, customers and
government partners without disruption.
- Within days, 90% of our non-clinical workforce was transitioned
to a work at home status while maintaining all service levels.
- More than 80 processes and protocols were developed to guide
our Care Delivery Organizations for COVID-19 scenarios, CDC
protocols, and state and county regulations.
Enlisting Our Resources to Serve
Others
- Accelerated nearly $2 billion of payments to care providers to
provide needed liquidity for the health system.
- Selected by HHS to assist in processing and distributing a
portion of the $100 billion CARES Act funding to care delivery
providers.
- Developed and tested a new self-administered COVID-19 swab
protocol, which is now FDA approved, and the protocol has led to
meaningfully improved testing efficiency, safety and protection of
health care workers and reduced consumption of personal protection
equipment.
- Waived all cost sharing for COVID-19 diagnosis and
treatment.
- Provided unlimited telehealth visits at no cost.
- Removed all COVID-19 prior authorizations.
- Opened free access to our mental health mobile app, and 24/7
emotional support phone lines, to help all Americans cope with
mental health impacts during the COVID-19 pandemic.
- Expanded support for socially isolated members, coordinating
access to medications, supplies, food, care and support
programs.
- Provided early refills, prolonged authorizations and increased
home delivery options of medication to ensure no shortages, and
hours were extended at our behavioral health pharmacies to ensure
medication adherence for those with mental health and substance use
disorders.
- Deployed triage tools, including a symptom checker with next
best action recommendations for our highest risk members. The tools
provide the most up-to-date information about prevention, coverage,
care and support needed to rapidly assess symptoms, schedule
telehealth visits, talk with a nurse, refill or schedule home
delivery for prescriptions and access to emotional support 24 hours
a day.
- Deployed 700 Advance Practice Clinicians to serve members and
patients on telehealth lines.
- Quickly shifted more than 4,000 OptumCare physicians to
telehealth visits that would otherwise be cancelled due to COVID-19
safety concerns. These visits are essential to ensure chronically
ill patients remain well cared for.
- Opened a special enrollment period to allow commercial
customers to add employees who previously declined health benefit
coverages.
- Facilitated coverage transitions to ensure current members
maintain health insurance.
- Allowed grace periods for employees and individuals to pay
premiums.
- Provided more than $60 million in support to date to those
affected by COVID-19, including hot spot relief efforts, health
workforce safety, seniors, homelessness and food insecurity.
- Organized our cafeteria and food service teams to make meals
for those in need – more than 75,000 meals per week -- in
Minneapolis-St. Paul, Greensboro, Hartford and Las Vegas.
- Allocated three senior executives to major scientific discovery
and relief efforts; one to assist development of a global strategy
for vaccine discovery and distribution at the World Health
Organization and two to provide leadership in developing and
deploying New Jersey’s field based hospital system.
- We will not request, nor do we intend to retain, any government
assistance.
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 29, 2020. The conference call replay can also be
accessed by dialing 1-800-757-4770. This earnings release and the
Form 8-K dated April 15, 2020, 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
which are intended to take advantage of the “safe harbor”
provisions of the federal securities law. The words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “forecast,”
“outlook,” “plan,” “project,” “should” and similar expressions
identify forward-looking statements. These statements may contain
information about financial prospects, economic conditions and
trends and involve risks and uncertainties. Actual results could
differ materially from those that management expects, depending on
the outcome of certain factors including: risks associated with
public health crises, large-scale medical emergencies and
pandemics, such as the COVID-19 pandemic; our ability to
effectively estimate, price for and manage medical costs; new or
changes in existing health care laws or regulations, or their
enforcement or application; the DOJ’s legal action relating to the
risk adjustment submission matter; our ability to maintain and
achieve improvement in quality scores impacting revenue; reductions
in revenue or delays to cash flows received under government
programs; changes in Medicare, the CMS star ratings program or the
application of risk adjustment data validation audits; failure to
maintain effective and efficient information systems or if our
technology products do not operate as intended; cyberattacks, other
privacy/data security incidents, or our failure to comply with
related regulations; risks and uncertainties associated with the
pharmacy benefits management industry; competitive pressures;
changes in or challenges to our public sector contract awards; our
ability to contract on competitive terms with physicians, hospitals
and other service providers; failure to achieve targeted operating
cost productivity improvements; increases in costs and other
liabilities associated with litigation, government investigations,
audits or reviews; failure to manage successfully our strategic
alliances or complete or receive anticipated benefits of strategic
transactions; fluctuations in foreign currency exchange rates;
downgrades in our credit ratings; our investment portfolio
performance; impairment of our goodwill and intangible assets; and
our ability to obtain sufficient funds from our regulated
subsidiaries or from external financings to fund our obligations,
maintain our debt to total capital ratio at targeted levels,
maintain our quarterly dividend payment cycle, or continue
repurchasing shares of our common stock. This above list is not
exhaustive. We discuss these matters, and certain risks that may
affect our business operations, financial condition and results of
operations more fully in our filings with the SEC, including our
reports on Forms 10-K, 10-Q and 8-K. By their nature,
forward-looking statements are not guarantees of future performance
or results and are subject to risks, uncertainties and assumptions
that are difficult to predict or quantify. Actual results may vary
materially from expectations expressed or implied in this document
or any of our prior communications. You should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made. We do not undertake to update or revise any
forward-looking statements, except as required by law.
UNITEDHEALTH GROUP Earnings Release Schedules and
Supplementary Information Quarter Ended March 31, 2020
- Condensed Consolidated Statements of Operations -
Condensed Consolidated Balance Sheets - Condensed Consolidated
Statements of Cash Flows - Supplemental Financial Information -
Businesses - Supplemental Financial Information - Business Metrics
- Reconciliation of Non-GAAP Financial Measure
UNITEDHEALTH
GROUP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data) (unaudited)
Three Months Ended March
31,
2020
2019
Revenues Premiums
$
50,640
$
47,513
Products
8,431
8,072
Services
4,985
4,318
Investment and other income
365
405
Total revenues
64,421
60,308
Operating costs Medical costs
41,000
38,939
Operating costs
10,015
8,517
Cost of products sold
7,687
7,381
Depreciation and amortization
723
639
Total operating costs
59,425
55,476
Earnings from operations
4,996
4,832
Interest expense
(437
)
(400
)
Earnings before income taxes
4,559
4,432
Provision for income taxes
(1,094
)
(875
)
Net earnings
3,465
3,557
Earnings attributable to noncontrolling interests
(83
)
(90
)
Net earnings attributable to UnitedHealth Group common
shareholders
$
3,382
$
3,467
Diluted earnings per share attributable to UnitedHealth Group
common shareholders
$
3.52
$
3.56
Adjusted earnings per share attributable to UnitedHealth Group
common shareholders (a)
$
3.72
$
3.73
Diluted weighted-average common shares outstanding
962
975
(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,
2020
2019
Assets Cash and short-term investments
$
24,445
$
14,245
Accounts receivable, net
14,613
11,822
Other current assets
19,749
16,567
Total current assets
58,807
42,634
Long-term investments
36,578
37,209
Other long-term assets
93,682
94,046
Total assets
$
189,067
$
173,889
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable
$
22,772
$
21,690
Short-term borrowings and current maturities of long-term debt
15,828
3,870
Other current liabilities
40,006
36,222
Total current liabilities
78,606
61,782
Long-term debt, less current maturities
35,779
36,808
Other long-term liabilities
13,078
13,137
Redeemable noncontrolling interests
1,741
1,726
Equity
59,863
60,436
Total liabilities, redeemable noncontrolling interests and equity
$
189,067
$
173,889
UNITEDHEALTH GROUP CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in millions) (unaudited)
Three Months
EndedMarch 31,
2020
2019
Operating Activities Net earnings
$
3,465
$
3,557
Noncash items: Depreciation and amortization
723
639
Deferred income taxes and other
247
176
Share-based compensation
231
243
Net changes in operating assets and liabilities
(1,723
)
(1,381
)
Cash flows from operating activities
2,943
3,234
Investing Activities Sales and maturities of investments,
net of purchases (purchases, net of sales and maturities)
30
(319
)
Purchases of property, equipment and capitalized software
(469
)
(562
)
Cash paid for acquisitions, net
(929
)
(689
)
Other, net
(165
)
154
Cash flows used for investing activities
(1,533
)
(1,416
)
Financing Activities Common share repurchases
(1,691
)
(3,002
)
Dividends paid
(1,024
)
(860
)
Net change in short-term borrowings and long-term debt
10,797
1,851
Other, net
1,221
1,739
Cash flows from (used for) financing activities
9,303
(272
)
Effect of exchange rate changes on cash and cash equivalents
(129
)
(5
)
Increase in cash and cash equivalents
10,584
1,541
Cash and cash equivalents, beginning of period
10,985
10,866
Cash and cash equivalents, end of period
$
21,569
$
12,407
UNITEDHEALTH GROUP SUPPLEMENTAL FINANCIAL INFORMATION -
BUSINESSES (in millions, except percentages) (unaudited)
Three Months Ended March
31,
2020
2019
Revenues UnitedHealthcare
$
51,068
$
48,896
Optum
32,839
26,360
Eliminations
(19,486
)
(14,948
)
Total consolidated revenues
$
64,421
$
60,308
Earnings from Operations UnitedHealthcare
$
2,888
$
2,954
Optum (a)
2,108
1,878
Total consolidated earnings from operations
$
4,996
$
4,832
Operating Margin UnitedHealthcare
5.7
%
6.0
%
Optum
6.4
%
7.1
%
Consolidated operating margin
7.8
%
8.0
%
Revenues UnitedHealthcare Employer & Individual
$
14,280
$
14,084
UnitedHealthcare Medicare & Retirement
23,152
21,096
UnitedHealthcare Community & State
11,453
11,182
UnitedHealthcare Global
2,183
2,534
OptumHealth
$
9,192
$
6,713
OptumInsight
2,494
2,189
OptumRx
21,557
17,817
Optum eliminations
(404
)
(359
)
(a)
Earnings from operations for Optum for the three months ended March
31, 2020 and 2019 included $712 and $626 for OptumHealth; $536 and
$432 for OptumInsight; and $860 and $820 for OptumRx, respectively.
UNITEDHEALTH GROUP SUPPLEMENTAL FINANCIAL INFORMATION -
BUSINESS METRICS UNITEDHEALTHCARE CUSTOMER
PROFILE (in thousands)
People Served March
31,2020 December 31,2019 March 31,2019
Commercial: Risk-based
8,215
8,575
8,340
Fee-based
18,825
19,185
19,175
Total Commercial
27,040
27,760
27,515
Medicare Advantage
5,575
5,270
5,165
Medicaid
5,880
5,900
6,425
Medicare Supplement (Standardized)
4,440
4,500
4,500
Total Public and Senior
15,895
15,670
16,090
Total UnitedHealthcare - Domestic Medical
42,935
43,430
43,605
International
5,605
5,720
6,125
Total UnitedHealthcare - Medical
48,540
49,150
49,730
Supplemental Data Medicare Part D stand-alone
4,150
4,405
4,480
OPTUM PERFORMANCE METRICS March
31,2020 December 31,2019 March 31,2019
OptumHealth Consumers Served (in millions)
96
96
93
OptumInsight Contract Backlog (in billions)
$
19.2
$
19.3
$
17.4
OptumRx Quarterly Adjusted Scripts (in millions)
339
333
339
Note: UnitedHealth Group served 139 million unique individuals
across all businesses at March 31, 2020.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (in millions,
except per share data) (unaudited)
ADJUSTED NET EARNINGS
PER SHARE(a) Three Months EndedMarch 31,
ProjectedYear EndedDecember 31,
2020
2019
2020
GAAP net earnings attributable to UnitedHealth Group common
shareholders
$
3,382
$
3,467
$14,750 - $15,050 Intangible amortization
265
227
~1,025 Tax effect of intangible amortization
(65
)
(56
)
~(250) Adjusted net earnings attributable to UnitedHealth Group
common shareholders
$
3,582
$
3,638
$15,525 - $15,825 GAAP diluted earnings per share
$
3.52
$
3.56
$15.45 - $15.75 Intangible amortization per share
0.27
0.23
~1.05 Tax effect per share of intangible amortization
(0.07
)
(0.06
)
~(0.25) Adjusted diluted earnings per share
$
3.72
$
3.73
$16.25 - $16.55
(a)
Adjusted net earnings per share is a non-GAAP financial measure.
Non-GAAP financial measures should be considered in addition to,
but not as a substitute for, or superior to, financial measures
prepared in accordance with GAAP.Adjusted net earnings per share
excludes from the relevant GAAP metric, as applicable, intangible
amortization and other items, if any, that do not relate to the
Company's underlying business performance. Management believes that
the use of adjusted net earnings per share provides investors and
management useful information about the earnings impact of
acquisition-related intangible asset amortization. As amortization
fluctuates based on the size and timing of the Company’s
acquisition activity, management believes this exclusion provides a
more useful comparison of the Company's underlying business
performance and trends from period to period. While intangible
assets contribute to the Company’s revenue generation, the
intangible amortization is not directly related. Therefore, the
related revenues are included in adjusted earnings per share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200415005213/en/
Investors: Brett Manderfeld Senior Vice President
952-936-7216
Media: Matt Stearns Senior Vice President
202-276-0085
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