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UnitedHealth Group Reports 2019 Results

January 15, 2020 GMT

MINNETONKA, Minn.--(BUSINESS WIRE)--Jan 15, 2020--

Diversified strength in performance continued across UnitedHealth Group (NYSE: UNH) in the fourth quarter and full year 2019.

“The dedicated women and men of UnitedHealth Group work together each day to improve outcomes and the patient and physician experience, while making health care more affordable, enabling us to serve more people better, while positioning us for continued growth in 2020,” said David S. Wichmann, chief executive officer of UnitedHealth Group.

The Company affirmed its recently issued full year earnings 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.

Quarterly and Annual Financial Performance

 

 

Three Months Ended

Year Ended

 

December 31,
2019

December 31,
2018

September 30,
2019

December 31,
2019

December 31,
2018

 

Revenues

 

$60.9 billion

 

 

$58.4 billion

 

 

$60.4 billion

 

 

$242.2 billion

 

 

$226.2 billion

 

Earnings from
Operations

$5.1 billion

$4.5 billion

 

$5.0 billion

 

$19.7 billion

 

$17.3 billion

 

 

 

 

 

 

 

 

 

 

Net Margin

5.8%

 

5.2%

 

5.9%

 

5.7%

 

5.3%

 

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 and Annual Financial Performance

 

Three Months Ended

Year Ended

 

December 31,
2019

December 31,
2018

September 30,
2019

December 31,
2019

December 31,
2018

 

Revenues

 

$48.2 billion

 

 

$46.2 billion

 

 

$48.1 billion

 

 

$193.8 billion

 

 

$183.5 billion

 

Earnings from
Operations

 

 

$2.1 billion

 

 

 

$1.8 billion

 

 

 

$2.7 billion

 

 

 

$10.3 billion

 

 

 

$9.1 billion

 

Operating
Margin

4.3%

 

3.9%

 

5.5%

 

5.3%

 

5.0%

 

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 and Annual Financial Performance

 

Three Months Ended

Year Ended

 

 

December 31,
2019

 

December 31,
2018

 

September 30,
2019

 

December 31,
2019

 

December 31,
2018

 

Revenues

 

$29.8 billion

 

 

$27.6 billion

 

 

$28.8 billion

 

 

$113.0 billion

 

 

$101.3 billion

 

Earnings from
Operations

 

 

$3.0 billion

 

 

 

$2.7 billion

 

 

 

$2.4 billion

 

 

 

$9.4 billion

 

 

 

$8.2 billion

 

 

 

 

 

 

 

 

 

 

Operating
Margin

 

10.1%

 

 

9.8%

 

 

8.2%

 

 

8.3%

 

 

8.1%

 

 

 

 

 

 

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 January 29, 2020. The conference call replay can also be accessed by dialing 1-800-839-1192. This earnings release and the Form 8-K dated January 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: 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; 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; 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 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
Year Ended December 31, 2019
 
- Condensed Consolidated Statements of Operations
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Cash Flows
- Supplemental Financial Information - Businesses
- Supplemental Financial Information - Business Metrics
- Reconciliation of Non-GAAP Financial Measure
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
 
Three Months Ended
December 31,
Year Ended
December 31,

2019

 

2018

 

2019

 

2018

Revenues
Premiums

$

47,625

 

$

44,932

 

$

189,699

 

$

178,087

 

Products

 

7,626

 

 

8,551

 

 

31,597

 

 

29,601

 

Services

 

5,217

 

 

4,593

 

 

18,973

 

 

17,183

 

Investment and other income

 

433

 

 

341

 

 

1,886

 

 

1,376

 

Total revenues

 

60,901

 

 

58,417

 

 

242,155

 

 

226,247

 

Operating costs
Medical costs

 

39,276

 

 

36,955

 

 

156,440

 

 

145,403

 

Operating costs

 

9,301

 

 

8,703

 

 

35,193

 

 

34,074

 

Cost of products sold

 

6,511

 

 

7,625

 

 

28,117

 

 

26,998

 

Depreciation and amortization

 

718

 

 

637

 

 

2,720

 

 

2,428

 

Total operating costs

 

55,806

 

 

53,920

 

 

222,470

 

 

208,903

 

Earnings from operations

 

5,095

 

 

4,497

 

 

19,685

 

 

17,344

 

Interest expense

 

(437

)

 

(374

)

 

(1,704

)

 

(1,400

)

Earnings before income taxes

 

4,658

 

 

4,123

 

 

17,981

 

 

15,944

 

Provision for income taxes

 

(990

)

 

(959

)

 

(3,742

)

 

(3,562

)

Net earnings

 

3,668

 

 

3,164

 

 

14,239

 

 

12,382

 

Earnings attributable to noncontrolling interests

 

(127

)

 

(124

)

 

(400

)

 

(396

)

Net earnings attributable to UnitedHealth Group common shareholders

$

3,541

 

$

3,040

 

$

13,839

 

$

11,986

 

Diluted earnings per share attributable to UnitedHealth Group common shareholders

$

3.68

 

$

3.10

 

$

14.33

 

$

12.19

 

Adjusted earnings per share attributable to UnitedHealth Group common shareholders (a)

$

3.90

 

$

3.28

 

$

15.11

 

$

12.88

 

Diluted weighted-average common shares outstanding

 

962

 

 

982

 

 

966

 

 

983

 

(a)

See page 6 for a reconciliation of the non-GAAP measure
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
 

December 31,

December 31,

2019

2018

Assets
Cash and short-term investments

$

14,245

$

14,324

Accounts receivable, net

 

11,822

 

11,388

Other current assets

 

16,567

 

12,980

Total current assets

 

42,634

 

38,692

Long-term investments

 

37,209

 

32,510

Other long-term assets

 

94,046

 

81,019

Total assets

$

173,889

$

152,221

Liabilities, redeemable noncontrolling interests and equity
Medical costs payable

$

21,690

$

19,891

Commercial paper and current maturities of long-term debt

 

3,870

 

1,973

Other current liabilities

 

36,222

 

31,345

Total current liabilities

 

61,782

 

53,209

Long-term debt, less current maturities

 

36,808

 

34,581

Other long-term liabilities

 

13,137

 

8,204

Redeemable noncontrolling interests

 

1,726

 

1,908

Equity

 

60,436

 

54,319

Total liabilities, redeemable noncontrolling interests and equity

$

173,889

$

152,221

UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 
Year Ended
December 31,

2019

2018

Operating Activities
Net earnings

$

14,239

 

$

12,382

 

Noncash items:
Depreciation and amortization

 

2,720

 

 

2,428

 

Deferred income taxes and other

 

124

 

 

(29

)

Share-based compensation

 

697

 

 

638

 

Net changes in operating assets and liabilities

 

683

 

 

294

 

Cash flows from operating activities

 

18,463

 

 

15,713

 

Investing Activities
Purchases of investments, net of sales and maturities

 

(2,504

)

 

(4,099

)

Purchases of property, equipment and capitalized software

 

(2,071

)

 

(2,063

)

Cash paid for acquisitions, net

 

(8,343

)

 

(5,997

)

Other, net

 

219

 

 

(226

)

Cash flows used for investing activities

 

(12,699

)

 

(12,385

)

Financing Activities
Common share repurchases

 

(5,500

)

 

(4,500

)

Dividends paid

 

(3,932

)

 

(3,320

)

Net change in commercial paper and long-term debt

 

3,994

 

 

4,134

 

Other, net

 

(187

)

 

(679

)

Cash flows from (used for) financing activities

 

(5,625

)

 

(4,365

)

Effect of exchange rate changes on cash and cash equivalents

 

(20

)

 

(78

)

Increase (decrease) in cash and cash equivalents

 

119

 

 

(1,115

)

Cash and cash equivalents, beginning of period

 

10,866

 

 

11,981

 

Cash and cash equivalents, end of period

$

10,985

 

$

10,866

 

UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES
(in millions, except percentages)
(unaudited)
 
Three Months Ended
December 31,
Year Ended
December 31,

2019

 

2018

 

2019

 

2018

Revenues
UnitedHealthcare

$

48,247

 

$

46,234

 

$

193,842

 

$

183,476

 

Optum

 

29,798

 

 

27,562

 

 

112,950

 

 

101,280

 

Eliminations

 

(17,144

)

 

(15,379

)

 

(64,637

)

 

(58,509

)

Total consolidated revenues

$

60,901

 

$

58,417

 

$

242,155

 

$

226,247

 

Earnings from Operations
UnitedHealthcare

$

2,075

 

$

1,797

 

$

10,326

 

$

9,113

 

Optum (a)

 

3,020

 

 

2,700

 

 

9,359

 

 

8,231

 

Total consolidated earnings from operations

$

5,095

 

$

4,497

 

$

19,685

 

$

17,344

 

Operating Margin
UnitedHealthcare

 

4.3

%

 

3.9

%

 

5.3

%

 

5.0

%

Optum

 

10.1

%

 

9.8

%

 

8.3

%

 

8.1

%

Consolidated operating margin

 

8.4

%

 

7.7

%

 

8.1

%

 

7.7

%

 
Revenues
UnitedHealthcare Employer & Individual

$

14,538

 

$

13,905

 

$

56,945

 

$

54,761

 

UnitedHealthcare Medicare & Retirement

 

20,603

 

 

18,900

 

 

83,252

 

 

75,473

 

UnitedHealthcare Community & State

 

10,752

 

 

10,955

 

 

43,790

 

 

43,426

 

UnitedHealthcare Global

 

2,354

 

 

2,474

 

 

9,855

 

 

9,816

 

 
OptumHealth

$

8,323

 

$

6,393

 

$

30,317

 

$

24,145

 

OptumInsight

 

2,861

 

 

2,500

 

 

10,006

 

 

9,008

 

OptumRx

 

19,094

 

 

19,052

 

 

74,288

 

 

69,536

 

Optum eliminations

 

(480

)

 

(383

)

 

(1,661

)

 

(1,409

)

(a)

Earnings from operations for Optum for the three months and year ended December 31, 2019 included $901 and $2,963 for OptumHealth; $905 and $2,494 for OptumInsight; and $1,214 and $3,902 for OptumRx, respectively. Earnings from operations for Optum for the three months and year ended December 31, 2018 included $750 and $2,430 for OptumHealth; $861 and $2,243 for OptumInsight; and $1,089 and $3,558 for OptumRx, respectively.
UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS
 
UNITEDHEALTHCARE CUSTOMER PROFILE
(in thousands)
 
People ServedDecember 31,
2019
September 30,
2019
December 31,
2018
Commercial:
Risk-based

 

8,575

 

8,605

 

8,495

Fee-based

 

19,185

 

19,230

 

18,420

Total Commercial

 

27,760

 

27,835

 

26,915

Medicare Advantage

 

5,270

 

5,230

 

4,945

Medicaid

 

5,900

 

5,965

 

6,450

Medicare Supplement (Standardized)

 

4,500

 

4,510

 

4,545

Total Public and Senior

 

15,670

 

15,705

 

15,940

Total UnitedHealthcare - Domestic Medical

 

43,430

 

43,540

 

42,855

International

 

5,720

 

5,845

 

6,220

Total UnitedHealthcare - Medical

 

49,150

 

49,385

 

49,075

 
Supplemental Data
Medicare Part D stand-alone

 

4,405

 

4,415

 

4,710

 
 
OPTUM PERFORMANCE METRICS
 
December 31,
2019
September 30,
2019
December 31,
2018
OptumHealth Consumers Served (in millions)

 

96

 

95

 

93

OptumInsight Contract Backlog (in billions)

$

19.3

$

19.0

$

17.0

OptumRx Quarterly Adjusted Scripts (in millions)

 

333

 

325

 

348

Note: UnitedHealth Group served 137 million unique individuals across all businesses at December 31, 2019.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in millions, except per share data)
(unaudited)
 
ADJUSTED NET EARNINGS PER SHARE (a)
 
Three Months Ended
December 31,
Year Ended
December 31,
Projected
Year Ended
December 31,

2019

 

2018

 

2019

 

2018

 

2020

GAAP net earnings attributable to UnitedHealth Group common shareholders

$

3,541

 

$

3,040

 

$

13,839

 

$

11,986

 

$14,750 - $15,050

Intangible amortization

 

275

 

 

238

 

 

1,004

 

 

899

 

~1,025

Tax effect of intangible amortization

 

(68

)

 

(60

)

 

(248

)

 

(225

)

~(250)

Adjusted net earnings attributable to UnitedHealth Group common shareholders

$

3,748

 

$

3,218

 

$

14,595

 

$

12,660

 

$15,525 - $15,825

 
GAAP diluted earnings per share

$

3.68

 

$

3.10

 

$

14.33

 

$

12.19

 

$15.45 - $15.75

Intangible amortization per share

 

0.29

 

 

0.24

 

 

1.04

 

 

0.91

 

~1.05

Tax effect per share of intangible amortization

 

(0.07

)

 

(0.06

)

 

(0.26

)

 

(0.22

)

~(0.25)

Adjusted diluted earnings per share

$

3.90

 

$

3.28

 

$

15.11

 

$

12.88

 

$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.

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View source version on businesswire.com:https://www.businesswire.com/news/home/20200115005257/en/

CONTACT: Investors:

Brett Manderfeld

Senior Vice President

952-936-7216Media:

Matt Stearns

Senior Vice President

202-276-0085

KEYWORD: UNITED STATES NORTH AMERICA MINNESOTA

INDUSTRY KEYWORD: PROFESSIONAL SERVICES HEALTH HOSPITALS INSURANCE MANAGED CARE GENERAL HEALTH

SOURCE: UnitedHealth Group

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PUB: 01/15/2020 05:55 AM/DISC: 01/15/2020 05:55 AM

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