UnitedHealth Group Reports Second Quarter Results

UnitedHealth Group reported second quarter results, with continued strong, well-diversified performance across the enterprise. “Today, UnitedHealth Group delivers increasing value to more people, driven by strong execution, consistently high quality, deep relationships and our distinctive combination of clinical, technology and information capabilities. As we look ahead, we will drive our growth on the strength of practical innovations that anticipate and respond to increasing consumer expectations and clear social needs,” said David S. Wichmann, chief executive officer of UnitedHealth Group.

Based on first half 2018 results and the business outlook for the balance of the year, the Company has raised its outlook for 2018 net earnings to a range of USD 11.80 to USD 12.05 per share and adjusted net earnings to a range of USD 12.50 to USD 12.75 per share, and now expects cash flows from operations to approach USD 15.5 billion.

• UnitedHealth Group’s second quarter 2018 revenues grew USD 6 billion or 12.1 percent year-over-year to USD 56.1 billion.
• Second quarter earnings from operations grew USD 473 million or 12.7 percent year-over-year to USD 4.2 billion. Adjusted net earnings of USD 3.14 per share grew 27.6 percent, with an improved net margin of 5.2 percent.
• Cash flows from operations of USD 4.0 billion were 1.3x net income in second quarter 2018, compared to USD 2.2 billion and 0.9x net income in second quarter 2017.
• The consolidated medical care ratio of 81.9 percent in the second quarter of 2018 decreased 30 basis points year-over-year, as the return of the health insurance tax more than offset business mix changes and reduced levels of prior year reserve development. Medical cost reserve development of USD 20 million was driven by positive development in cost estimates for first quarter 2018 business.
• The operating cost ratio of 15.0 percent in the second quarter of 2018 increased 40 basis points year-over-year, as business mix and operating cost efficiencies were more than offset by the return of the health insurance tax.
• The second quarter 2018 income tax rate of 22 percent decreased 9.5 percentage points year-over-year, reflecting the reduced federal statutory rate and stock-based compensation activity, partially offset by the return of the nondeductible health insurance tax for 2018.
• Second quarter 2018 days claims payable decreased one day sequentially to 48 days; second quarter days sales outstanding decreased one day sequentially to 18 days.
• Annualized return on shareholders’ equity was 24.4 percent in the second quarter, and the debt to total capital ratio decreased 80 basis points sequentially to 40.8 percent at June 30, 2018.
• UnitedHealth Group repurchased 2.2 million shares for USD 500 million in the second quarter, bringing year-to-date purchases to 13.8 million shares for USD 3.15 billion. Dividends paid to shareholders were USD 866 million in the second quarter and reflected raising the annual dividend payment rate by 20 percent to USD 3.60 per share in June 2018.

UnitedHealthcare provides global healthcare benefits, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to simplifying the healthcare experience, meeting consumer health and wellness needs and sustaining trusted relationships with care providers.

• UnitedHealthcare grew to serve 2.2 million more consumers year-over-year in the second quarter of 2018, with revenues growing by USD 5.1 billion or 12.4 percent to USD 45.8 billion. Revenue growth was driven by an increasing number of people served, a higher revenue membership mix, pricing increases to cover expected medical cost trends and resumption of the health insurance tax for 2018. Second quarter 2018 earnings from operations of USD 2.4 billion grew 6.6 percent.
• UnitedHealthcare Employer & Individual second quarter 2018 revenues of USD 13.7 billion increased USD 742 million year-over-year. UnitedHealthcare Employer & Individual grew to serve 50,000 more people through risk-based offerings in the quarter, while fee-based products decreased by 60,000 people.
• UnitedHealthcare Medicare & Retirement grew revenues by USD 2.1 billion or 12.6 percent year-over-year to USD 18.9 billion in the second quarter of 2018. The business served 45,000 more seniors in the quarter, including 30,000 in Medicare Advantage plans. The number of people UnitedHealthcare Medicare & Retirement served through Medicare Advantage grew by 450,000 or 10.4 percent year-over-year.
• In second quarter 2018, UnitedHealthcare Community & State revenues of USD 10.7 billion grew USD 1.6 billion or 17.1 percent year-over-year, reflecting 12-month membership growth of 330,000 people and services to an increasing mix of individuals with higher clinical needs. Second quarter membership grew 15,000 people sequentially.
• UnitedHealthcare Global revenues grew 33.5 percent year-over-year to USD 2.5 billion, due principally to business expansion.

Optum is a health services business serving the global healthcare 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 healthcare costs and improving the consumer experience and health system performance.

• In the second quarter of 2018, Optum revenues grew by USD 2 billion or 9.1 percent year-over-year to USD 24.7 billion. Optum’s operating margin of 7.5 percent expanded 80 basis points year-over-year. Second quarter earnings from operations grew USD 327 million or 21.5 percent year-over-year to USD 1.8 billion, with double-digit percentage earnings growth rates for each business segment.
• OptumHealth revenues of USD 5.9 billion grew USD 819 million or 16 percent year-over-year, driven by growth in care delivery and behavioral health, digital consumer engagement and health financial services. OptumHealth served 92 million people at quarter end, having grown to serve 6 million more people or 7 percent over the past year.
• OptumInsight revenues grew 9.6 percent to USD 2.2 billion in second quarter 2018, leveraging its data analytics capabilities for customers and driven by growth and expansion in technology, business process and care provider advisory services. OptumInsight’s contract backlog of USD 15.4 billion grew USD 2 billion or 14.9 percent year-over-year.
• OptumRx second quarter 2018 revenues grew 7 percent year-over-year to USD 16.9 billion. OptumRx fulfilled 332 million adjusted scripts in second quarter 2018, growing 3.1 percent over the prior year, with favorable mix in specialty pharmacy and home delivery services. – Medical Buyer Bureau