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UnitedHealth Group Reports First Quarter Performance

April 15, 2021 GMT

MINNETONKA, Minn.--(BUSINESS WIRE)--Apr 15, 2021--

Strong, well-diversified business performance contributed to growth across UnitedHealth Group (NYSE: UNH) in the first quarter 2021, even as the Company continued to support consumers, customers and the broader health system in the pandemic response.

“The unique combined capabilities of Optum and UnitedHealthcare and the unwavering commitment of our people continue to help advance the way care is delivered, improving results for those we serve and shareholders,” said Andrew Witty, chief executive officer of UnitedHealth Group.

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Based upon initial 2021 business performance trends, the Company increased its full year net earnings outlook to $17.15 to $17.65 per share and adjusted earnings to $18.10 to $18.60 per share. This outlook continues to include approximately $1.80 per share in potential net unfavorable impact to accommodate continuing COVID-19 effects, such as: testing and treatment costs; the residual impact of people having deferred care in 2020; and unemployment and other economy-driven factors. COVID-19 treatment and testing during the quarter was higher than expected, paired with higher elective care deferral patterns. UnitedHealth Group is focused on encouraging and helping people to obtain the care they need, including vaccinations, and expects a continued rise in provision of care as the year progresses. The Company has provided support to ensure continued stability of the health system in response to the pandemic. For more information about UnitedHealth Group’s response to COVID-19, go to https://www.unitedhealthgroup.com/newsroom/addressing-covid.html.

Quarterly Financial Performance

 

Three Months Ended

 

 

March 31,

2021

March 31,

2020

December 31,

2020

 

Revenues

 

$70.2 billion

 

$64.4 billion

 

$65.5 billion

Earnings from Operations

$6.7 billion

$5.0 billion

$3.5 billion

Net Margin

6.9%

5.2%

3.4%

  • UnitedHealth Group’s first quarter 2021 revenues of $70.2 billion grew $5.8 billion or 9.0% year-over-year, reflecting broad-based growth across Optum and UnitedHealthcare.

  • First quarter 2021 earnings from operations grew $1.7 billion or 34.9% year-over-year to $6.7 billion, with both Optum and UnitedHealthcare contributing to the expansion.

  • The first quarter medical care ratio of 80.9% compared to 81.0% in first quarter 2020. Favorable medical reserve development was $1.0 billion in the quarter compared to $850 million in the fourth quarter 2020 and $580 million in the first quarter last year. Days claims payable of 49.8 days compared to 47.8 days in the fourth quarter 2020 and 50.5 days in the first quarter 2020.

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  • The first quarter 2021 operating cost ratio of 14.6% decreased from 15.5% in first quarter 2020 due to the repeal of the health insurance tax and continued operating efficiency gains, partially offset by business mix, and increased service, growth and innovation investments.

  • Cash flows from operations in first quarter 2021 were $6.0 billion, or 1.2 times net income.

  • Return on equity of 29.5% in the quarter reflected the Company’s strong overall operating performance and efficient capital structure.

UnitedHealthcare provides health care benefits globally, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to improving the value 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,

2021

March 31,

2020

December 31,

2020

 

Revenues

 

$55.1 billion

 

$51.1 billion

 

$50.3 billion

Earnings from Operations

$4.1 billion

$2.9 billion

$396 million

Operating Margin

7.5%

5.7%

0.8%

  • UnitedHealthcare first quarter revenues of $55.1 billion grew by $4.0 billion or 7.9% compared to last year, led by continued growth in people served by community and senior programs.

  • In the first quarter 2021, people served by UnitedHealthcare grew by more than 1 million since the end of 2020.

  • First quarter 2021 operating earnings were $4.1 billion compared to $2.9 billion last year, reflecting growth in people served and the absence of an extra calendar day which impacted first quarter 2020.

  • Growth highlights include: strong individual Medicare Advantage membership growth during the annual enrollment period, several large new Group MA business wins and growth in people served in Dual Special Needs Plans; a Medicaid contract award in Oklahoma to serve TANF, CHIP and expansion populations across the state; and continued strong growth in specialty products, including dental and vision, and a strong commercial benefits selling season.

Optum is a health services business serving the global health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using market-leading information, data analytics, technology and clinical insights, Optum helps improve overall health system performance: optimizing care quality, reducing health care costs and improving the consumer experience.

Quarterly Financial Performance

 

Three Months Ended

 

 

March 31,

2021

March 31,

2020

December 31,

2020

 

Revenues

 

$36.4 billion

 

$32.8 billion

 

$35.9 billion

Earnings from Operations

$2.6 billion

$2.1 billion

$3.1 billion

Operating Margin

7.2%

6.4%

8.7%

  • Optum first quarter revenues grew 10.8% to $36.4 billion and operating earnings grew 24.8% to $2.6 billion.

  • OptumHealth revenue per consumer served increased 31% year-over-year during the first quarter 2021, driven by growth in the number of people served in value-based care arrangements and increasing acuity of the care services provided. OptumHealth served 99 million people at the end of first quarter 2021 compared to 96 million people a year ago.

  • OptumInsight’s revenue backlog increased by $1.6 billion in the first quarter to $20.8 billion, driven by growth in comprehensive managed services, including revenue management, payment integrity, information technology and data analytics. As previously announced, the OptumInsight and Change Healthcare (NASDAQ: CHNG) combination is expected to close during the second half 2021. This combination will more effectively connect and simplify core clinical, administrative and payment processes, resulting in better health outcomes and experiences for users, at lower cost.

  • OptumRx revenues and earnings grew modestly compared to the first quarter of 2020 and adjusted scripts were 329 million compared to 339 million last year. First quarter 2020 included the advance provision of medications to people served in response to COVID-related supply concerns, with script levels then receding with care deferral patterns.

  • Growth highlights include: continued expansion of Optum Care’s integrated local care delivery networks, including expanded digital capabilities and strong growth serving seniors across in-home, clinic-based and other ambulatory care settings; OptumInsight new business wins, contract extensions and pipeline growth in comprehensive managed services; strong execution at OptumRx onboarding hundreds of new clients and continued growth and diversification of pharmacy care services, including community-based behavioral health pharmacies, alternate site infusion services, e-commerce, specialty pharmacy, prescription discount cards and multi-dose packaging.

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: Optum, which provides information and technology-enabled health services; and UnitedHealthcare, which provides health care coverage and benefits 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 Investor Relations 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, 2021. The conference call replay can also be accessed by dialing 1-855-859-2056, Conference ID: 2769667. This earnings release and the Form 8-K dated April 15, 2021 can also be accessed from the Investor Relations 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 attract, develop, retain, and manage the succession of key employees and executives; the impact of potential changes in tax laws and regulations (including any increase in the U.S. income tax rate applicable to corporations); 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, 2021
 
- 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,

2021

2020

Revenues
Premiums

$55,486

$50,640

Products

8,340

8,431

Services

5,918

4,985

Investment and other income

452

365

Total revenues

70,196

64,421

Operating costs
Medical costs

44,904

41,000

Operating costs

10,223

10,015

Cost of products sold

7,572

7,687

Depreciation and amortization

758

723

Total operating costs

63,457

59,425

Earnings from operations

6,739

4,996

Interest expense

(397)

(437)

Earnings before income taxes

6,342

4,559

Provision for income taxes

(1,364)

(1,094)

Net earnings

4,978

3,465

Earnings attributable to noncontrolling interests

(116)

(83)

Net earnings attributable to UnitedHealth Group common shareholders

$4,862

$3,382

Diluted earnings per share attributable to UnitedHealth Group common shareholders

$5.08

$3.52

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

$5.31

$3.72

Diluted weighted-average common shares outstanding

957

962

(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,

 

2021

 

2020

Assets
Cash and short-term investments

$22,917

$19,781

Accounts receivable, net

15,980

12,870

Other current assets

20,611

21,067

Total current assets

59,508

53,718

Long-term investments

42,406

41,242

Other long-term assets

103,257

102,329

Total assets

$205,171

$197,289

Liabilities, redeemable noncontrolling interests and equity
Medical costs payable

$24,833

$21,872

Short-term borrowings and current maturities of long-term debt

8,838

4,819

Other current liabilities

46,970

45,729

Total current liabilities

80,641

72,420

Long-term debt, less current maturities

37,420

38,648

Other long-term liabilities

16,528

15,682

Redeemable noncontrolling interests

1,269

2,211

Equity

69,313

68,328

Total liabilities, redeemable noncontrolling interests and equity

$205,171

$197,289

UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 

Three Months Ended
March 31,

2021

2020

Operating Activities
Net earnings

$4,978

$3,465

Noncash items:
Depreciation and amortization

758

723

Deferred income taxes and other

286

247

Share-based compensation

256

231

Net changes in operating assets and liabilities

(273)

(1,723)

Cash flows from operating activities

6,005

2,943

Investing Activities
(Purchases of investments, net of sales and maturities) Sales and maturities, net of purchases

(1,714)

30

Purchases of property, equipment and capitalized software

(568)

(469)

Cash paid for acquisitions, net

(1,193)

(929)

Other, net

(232)

(165)

Cash flows used for investing activities

(3,707)

(1,533)

Financing Activities
Common share repurchases

(1,650)

(1,691)

Dividends paid

(1,181)

(1,024)

Net change in short-term borrowings and long-term debt

2,907

10,797

Other, net

711

1,221

Cash flows from financing activities

787

9,303

Effect of exchange rate changes on cash and cash equivalents

(51)

(129)

Increase in cash and cash equivalents

3,034

10,584

Cash and cash equivalents, beginning of period

16,921

10,985

Cash and cash equivalents, end of period

$19,955

$21,569

UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES
(in millions, except percentages)
(unaudited)
 

Three Months Ended
March 31,

2021

 

2020

Revenues
UnitedHealthcare

$55,114

$51,068

Optum

36,384

32,839

Eliminations

(21,302)

(19,486)

Total consolidated revenues

$70,196

$64,421

Earnings from Operations
UnitedHealthcare

$4,108

$2,888

Optum (a)

2,631

2,108

Total consolidated earnings from operations

$6,739

$4,996

Operating Margin
UnitedHealthcare

7.5%

5.7%

Optum

7.2%

6.4%

Consolidated operating margin

9.6%

7.8%

 
Revenues
UnitedHealthcare Employer & Individual

$14,632

$14,280

UnitedHealthcare Medicare & Retirement

25,474

23,152

UnitedHealthcare Community & State

12,973

11,453

UnitedHealthcare Global

2,035

2,183

 
OptumHealth

$12,403

$9,192

OptumInsight

2,852

2,494

OptumRx

21,604

21,557

Optum eliminations

(475)

(404)

(a)

Earnings from operations for Optum for the three months ended March 31, 2021 and 2020 included $962 and $712 for OptumHealth; $779 and $536 for OptumInsight; and $890 and $860 for OptumRx, respectively.

UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS
 
UNITEDHEALTHCARE CUSTOMER PROFILE
(in thousands)
 
People Served March 31,
2021
December 31,
2020
March 31,
2020
Commercial:
Risk-based

7,860

7,910

8,215

Fee-based

18,455

18,310

18,825

Total Commercial

26,315

26,220

27,040

Medicare Advantage

6,335

5,710

5,575

Medicaid

6,975

6,620

5,880

Medicare Supplement (Standardized)

4,390

4,460

4,440

Total Community and Senior

17,700

16,790

15,895

Total UnitedHealthcare - Domestic Medical

44,015

43,010

42,935

Global

5,460

5,425

5,605

Total UnitedHealthcare - Medical

49,475

48,435

48,540

 
Supplemental Data
Medicare Part D stand-alone

3,795

4,045

4,150

 
OPTUM PERFORMANCE METRICS
 
March 31,
2021
December 31,
2020
March 31,
2020
OptumHealth Consumers Served (in millions)

99

98

96

OptumInsight Contract Backlog (in billions)

$20.8

$20.2

$19.2

OptumRx Quarterly Adjusted Scripts (in millions)

329

331

339

Note: UnitedHealth Group served 145 million unique individuals across all businesses at March 31, 2021.

UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in millions, except per share data)
(unaudited)
 
ADJUSTED NET EARNINGS PER SHARE (a)
 

Three Months Ended
March 31,

 

Projected
Year Ended
December 31,

2021

 

2020

 

2021

GAAP net earnings attributable to UnitedHealth Group common shareholders

$4,862

$3,382

$16,300 - $16,850
Intangible amortization

294

265

~1,190
Tax effect of intangible amortization

(71)

(65)

~(290)
Adjusted net earnings attributable to UnitedHealth Group common shareholders

$5,085

$3,582

$17,200 - $17,750
 
GAAP diluted earnings per share

$5.08

$3.52

$17.15 - $17.65
Intangible amortization per share

0.31

0.27

~1.25
Tax effect per share of intangible amortization

(0.08)

(0.07)

~(0.30)
Adjusted diluted earnings per share

$5.31

$3.72

$18.10 - $18.60

(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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Senior Vice President

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Matt Stearns

Senior Vice President

202-276-0085

KEYWORD: UNITED STATES NORTH AMERICA MINNESOTA

INDUSTRY KEYWORD: SOFTWARE PRACTICE MANAGEMENT INSURANCE PHARMACEUTICAL GENERAL HEALTH HEALTH PROFESSIONAL SERVICES TECHNOLOGY

SOURCE: UnitedHealth Group

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PUB: 04/15/2021 05:55 AM/DISC: 04/15/2021 05:55 AM

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