UNH
$243.16
Unitedhealth Group
$4.73
1.98%
Earnings Details
4th Quarter December 2017
Tuesday, January 16, 2018 5:55:00 AM
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Summary

Unitedhealth Group Beats

Unitedhealth Group (UNH) reported 4th Quarter December 2017 earnings of $2.59 per share on revenue of $52.1 billion. The consensus earnings estimate was $2.50 per share on revenue of $51.5 billion. The Earnings Whisper number was $2.56 per share. Revenue grew 9.5% on a year-over-year basis.

The company said it now expects 2018 earnings of $12.30 to $12.60 per share and continues to expect revenue of $223.0 billion to $225.0 billion. The company's previous guidance was earnings of $10.55 to $10.85 per share and the current consensus earnings estimate is $11.01 per share on revenue of $223.49 billion for the year ending December 31, 2018.

UnitedHealth Group Inc designs products, provides services and applies technologies that improve access to health and well-being services, simplify the health care experience and make health care more affordable.

Results
Reported Earnings
$2.59
Earnings Whisper
$2.56
Consensus Estimate
$2.50
Reported Revenue
$52.06 Bil
Revenue Estimate
$51.52 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

UnitedHealth Group Reports 2017 Results Highlighted by Continued Strong and Diversified Growth

Operating Earnings Exceeded $15.2 Billion, Up 18% Year-Over-Year

Net Earnings of $10.72 Per Share and Fourth Quarter Net Earnings of $3.65 Per Share included a One-Time, Non-Cash Deferred Tax Benefit of $1.22 and $1.21 Per Share, Respectively

Adjusted Net Earnings were $10.07 Per Share for the Full Year, Up 25% Year-Over-Year, and Grew 23% to $2.59 Per Share in the Fourth Quarter

--Cash Flows from Operations Grew 39% Year-Over-Year to $13.6 Billion

UnitedHealth Group (UNH) reported fourth quarter and full year 2017 results reflecting continued broad-based growth and strengthened operating performance across the enterprise. "We enter 2018 with both growth momentum and opportunity, as a result of our focus on improving the experience of those we serve, combined with actions taken to deepen our capabilities and presence in strategic markets," said David S. Wichmann, chief executive officer of UnitedHealth Group.

As a result of The Tax Cuts and Jobs Act of 2017, UnitedHealth Group’s 2017 net earnings of $10.72 per share included a $1.22 per share non-cash benefit from the revaluation of the Company’s net deferred tax liability. This one-time item affects the comparability of results between periods, and accordingly has been excluded from adjusted net earnings per share.

The Company revised its 2018 financial outlook to reflect the effects of the U.S. corporate tax law changes, dedicating a significant portion of the benefits to accelerating investments in data analytics, technology and innovations to better serve consumers and care systems and to advancing new and existing business platforms. UnitedHealth Group now expects 2018 net earnings of $11.65 to $11.95 per share and adjusted net earnings of $12.30 to $12.60 per share. Cash flows from operations are expected to range from $15 billion to $15.5 billion.

Quarterly and Annual Financial Performance
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2017
2016
2017
2017
2016
Revenues
$52.1 billion
$47.5 billion
$50.3 billion
$201.2 billion
$184.8 billion
Earnings From Operations
$4.0 billion
$3.2 billion
$4.1 billion
$15.2 billion
$12.9 billion
Net Margin
6.9%
3.5%
4.9%
5.2%
3.8%
Net Margin Adjusted for Tax Reform(1)
4.6%
4.7%
(1) The Tax Cuts and Jobs Act of 2017 resulted in a
$1.2 billion favorable non-cash revaluation of UnitedHealth Group’s
U.S. net deferred tax liability, reducing the 2017 full year tax
rate by 860 basis points to 22.8 percent and the fourth quarter tax
rate by 32.7 percentage points to -1.4 percent and impacting the
Company’s GAAP net margin.

UnitedHealth Group’s full year 2017 revenues of $201.2 billion grew 8.8 percent or $16.3 billion year-over-year. Revenue growth was broad-based and balanced across the businesses, reflecting strong demand for the Company’s product and service offerings.

Full year 2017 earnings from operations grew $2.3 billion, up 17.6 percent year-over-year to $15.2 billion, and adjusted net earnings grew 25.1 percent to $10.07 per share, with fourth quarter adjusted net earnings growing 22.7 percent year-over-year to $2.59 per share.

Full year 2017 cash flows from operations of $13.6 billion grew 38.8 percent year-over-year and were 1.3 times net earnings, with an increasing mix of cash generated by non-insurance businesses in 2017. Fourth quarter 2017 adjusted cash flows from operations were $2 billion.

The full year 2017 consolidated medical care ratio of 82.1 percent increased 90 basis points year-over-year, as a 140 basis point increase from the health insurance tax deferral was partially offset by $690 million in favorable prior year reserve development in 2017, compared to $220 million in 2016. The fourth quarter 2017 consolidated medical care ratio of 82.2 percent reflected consistent medical cost trends.

The full year 2017 operating cost ratio of 14.7 percent declined 70 basis points year-over-year from 15.4 percent in 2016, as a 90 basis point decrease from the health insurance tax deferral was partially offset by business mix.

Year end 2017 days claims payable of 50 days decreased one day sequentially and year-over-year; 2017 days sales outstanding rose one day sequentially and year-over-year to 17 days due to the mix of health care services revenues.

Driven by net earnings growth, including the deferred tax revaluation, return on equity increased to 24.4 percent in 2017. The debt to total capital ratio decreased 740 basis points year-over-year to 38.9 percent at December 31, 2017. Dividend payments grew 22.6 percent year-over-year to $2.8 billion, and the Company repurchased 8.6 million shares for $1.5 billion in 2017.

UnitedHealthcare provides global health care benefits, serving individuals and employers, and Medicare and Medicaid beneficiaries.

Quarterly and Annual Financial Performance
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2017
2016
2017
2017
2016
Revenues
$41.6 billion
$37.9 billion
$40.7 billion
$163.3 billion
$148.6 billion
Earnings From Operations
$1.8 billion
$1.4 billion
$2.4 billion
$8.5 billion
$7.3 billion
Operating Margin
4.2%
3.7%
5.9%
5.2%
4.9%

UnitedHealthcare’s full year 2017 revenues of $163.3 billion grew $14.7 billion or 9.9 percent year-over-year. In 2017, UnitedHealthcare grew to serve 2 million more people across domestic employer-sponsored, Medicare and Medicaid benefit offerings. UnitedHealthcare grew to serve 480,000 more consumers in the fourth quarter of 2017, helping lift revenues by 9.6 percent year-over-year to $41.6 billion. Full year 2017 earnings from operations of $8.5 billion grew 16.3 percent, driven by diversified revenue growth and improved operating performance. Fourth quarter 2017 earnings from operations of $1.8 billion were ahead of the Company’s outlook, due to strong business growth and increased reserve development. Comparisons of 2017 results with those of 2016 are affected by the health insurance tax deferral and a $350 million industry guarantee assessment in fourth quarter 2016. -- UnitedHealthcare Employer & Individual served nearly 30 million people at December 31, 2017. Full year 2017 revenues of $52.1 billion decreased $1 billion year-over-year, including nearly $200 million in the fourth quarter, due to the effects of the ACA Individual market withdrawals and health insurance tax deferral. These factors offset revenue increases from strong year-over-year growth of 465,000 people in commercial risk-based group benefit offerings, including 130,000 people in the fourth quarter.

UnitedHealthcare Medicare & Retirement served nearly 9 million people with medical benefit products at year end 2017, reflecting growth of 12.4 percent or approximately 1 million people. Growth was diversified, reflecting a balanced mix in Medicare Advantage, including serving more people in both the individual market and the employer-sponsored group retiree market, and through Medicare Supplement. Revenues grew by $9.7 billion or 17.2 percent to $66 billion in 2017, including growth of 16.7 percent to $16.4 billion in the fourth quarter.

In 2017, UnitedHealthcare Community & State grew to serve 6.7 million people across 28 state customers and the District of Columbia. Full year growth of 815,000 people, or 13.8 percent, included serving 330,000 more people in the fourth quarter. Revenues of $37.4 billion grew $4.5 billion or 13.7 percent year-over-year, with fourth quarter revenues increasing 15 percent, reflecting strong membership gains in 2017.

UnitedHealthcare Global served 4.1 million people at December 31, 2017. Revenues of $7.8 billion grew 24.6 percent, with fourth quarter revenues of $2 billion increasing 11.7 percent year-over-year. Revenue growth was driven by disciplined pricing, the full year impact of 2016 acquisitions and an improved currency exchange rate. Performance strengthened in 2017 as a result of pricing actions and advancements in clinical integration, as well as improvements in operating costs.

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’s people help improve overall health system performance: optimizing care quality, reducing health care costs and improving the consumer experience and health system performance.

Quarterly and Annual Financial Performance
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31,
December 31,
2017
2016
2017
2017
2016
Total Revenues
$24.4 billion
$22.2 billion
$22.9 billion
$91.2 billion
$83.6 billion
Earnings From Operations
$2.2 billion
$1.8 billion
$1.7 billion
$6.7 billion
$5.6 billion
Operating Margin
9.1%
8.1%
7.4%
7.4%
6.7%

In 2017, Optum revenues grew by $7.6 billion or 9.1 percent to $91.2 billion, with fourth quarter revenues increasing to $24.4 billion or 10 percent year-over-year, led by double-digit percentage growth at OptumHealth and OptumInsight. Optum’s full year earnings from operations grew $1.1 billion or 19.3 percent year-over-year to $6.7 billion, and the full year operating margin strengthened 70 basis points to 7.4 percent. All Optum reporting segments grew earnings from operations by 20 percent or more in the fourth quarter of 2017, with overall fourth quarter earnings increasing 23.8 percent and operating margin reaching 9.1 percent, led by expected seasonal strength from OptumInsight. -- OptumHealth revenues of $20.6 billion grew $3.7 billion or 21.7 percent year-over-year, including growth of 21.1 percent in the fourth quarter to $5.5 billion, driven primarily by growth and market expansion in care delivery, as well as growth in consumer health engagement services, behavioral health services and health financial services. OptumHealth served approximately 91 million people at year end 2017, having grown to serve 8 million more people during the year.

OptumInsight revenues grew 10.3 percent to $8.1 billion in 2017, with fourth quarter revenues of $2.2 billion increasing 8.1 percent year-over-year, driven by growth in revenue management and business process services. OptumInsight’s backlog ended the year at $15 billion, up 19 percent year-over-year.

In 2017, OptumRx revenues increased 5.5 percent year-over-year to $63.8 billion. Fourth quarter revenue of $17 billion increased 7.3 percent year-over-year. OptumRx fulfilled 1.3 billion adjusted scripts in 2017, growth of 59 million scripts or 4.7 percent over the prior year.

About UnitedHealth Group

UnitedHealth Group (UNH) is a diversified health and well-being 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 30, 2018. The conference call replay can also be accessed by dialing 1-800-839-3613. This earnings release and the Form 8-K dated January 16, 2018 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 within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These statements are intended to take advantage of the "safe harbor" provisions of the PSLRA. Generally the words "believe," "expect," "intend," "estimate," "anticipate," "forecast," "outlook," "plan," "project," "should" and similar expressions identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors.

Some factors that could cause actual results to differ materially from results discussed or implied in the forward-looking statements include: our ability to effectively estimate, price for and manage our medical costs, including the impact of any new coverage requirements; new laws or regulations, or changes in existing laws or regulations, or their enforcement or application, including increases in medical, administrative, technology or other costs or decreases in enrollment resulting from U.S., Brazilian and other jurisdictions’ regulations affecting the health care industry; the outcome of the Department of Justice’s legal actions relating to risk adjustment submission matters; our ability to maintain and achieve improvement in CMS star ratings and other quality scores that impact revenue; reductions in revenue or delays to cash flows received under Medicare, Medicaid and other government programs, including the effects of a prolonged U.S. government shutdown or debt ceiling constraints; changes in Medicare, including changes in payment methodology, the CMS star ratings program or the application of risk adjustment data validation audits; cyberattacks or other privacy or data security incidents; failure to comply with privacy and data security regulations; regulatory and other risks and uncertainties of the pharmacy benefits management industry; competitive pressures, which could affect our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; our ability to execute contracts on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity improvements, including savings resulting from technology enhancement and administrative modernization; increases in costs and other liabilities associated with increased litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of acquisitions and other strategic transactions; fluctuations in foreign currency exchange rates on our reported shareholders’ equity and results of operations; downgrades in our credit ratings; the performance of our investment portfolio; impairment of the value of our goodwill and intangible assets if estimated future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; 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 the debt or capital markets to fund our obligations, to maintain our debt to total capital ratio at targeted levels, to maintain our quarterly dividend payment cycle or to continue repurchasing shares of our common stock.

This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any or all forward-looking statements we make may turn out to be wrong, and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. 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 future 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 applicable securities laws.

UNITEDHEALTH GROUP
Earnings Release Schedules and Supplementary Information
Year
Ended December 31, 2017
- Condensed Consolidated Statements of Operations
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Cash Flows
- Supplemental Financial Information - Businesses
- Supplemental Financial Information - Business Metrics
- 2018 Outlook Revised for the Impact of Tax Reform
- Reconciliation of Non-GAAP Financial Measures
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months Ended
Years Ended
December 31,
December 31,
2017
2016
2017
2016
Revenues
Premiums
$ 40,378
$ 36,752
$ 158,453
$ 144,118
Products
7,157
6,959
26,366
26,658
Services
4,228
3,563
15,317
13,236
Investment and other income
298
261
1,023
828
Total revenues
52,061
47,535
201,159
184,840
Operating costs
Medical costs
33,207
29,696
130,036
117,038
Operating costs
7,820
7,817
29,557
28,401
Cost of products sold
6,479
6,308
24,112
24,416
Depreciation and amortization
578
527
2,245
2,055
Total operating costs
48,084
44,348
185,950
171,910
Earnings from operations
3,977
3,187
15,209
12,930
Interest expense
(308 )
(268 )
(1,186 )
(1,067 )
Earnings before income taxes
3,669
2,919
14,023
11,863
Benefit (provision) for income taxes
52
(1,211 )
(3,200 )
(4,790 )
Net earnings
3,721
1,708
10,823
7,073
Earnings attributable to noncontrolling interests
(104 )
(24 )
(265 )
(56 )
Net earnings attributable to UnitedHealth Group common
$
3,617
$
1,684
$
10,558
$
7,017
shareholders
Diluted earnings per share attributable to UnitedHealth Group
$
3.65
$
1.74
$
10.72
$
7.25
common shareholders
Adjusted earnings per share attributable to UnitedHealth Group
$
2.59
$
2.11
$
10.07
$
8.05
common shareholders (a)
Diluted weighted-average common shares outstanding
991
970
985
968
(a) See page 7 for a reconciliation of the non-GAAP measure
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in millions)
(unaudited)
December 31,
December 31,
2017
2016
Assets
Cash and short-term investments
$
15,490
$
13,275
Accounts receivable, net
9,568
8,152
Other current assets
12,026
12,452
Total current assets
37,084
33,879
Long-term investments
28,341
23,868
Other long-term assets
73,632
65,063
Total assets
$ 139,057
$
122,810
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable
$
17,871
$
16,391
Commercial paper and current maturities of long-term debt
2,857
7,193
Other current liabilities
29,735
25,668
Total current liabilities
50,463
49,252
Long-term debt, less current maturities
28,835
25,777
Other long-term liabilities
7,737
7,592
Redeemable noncontrolling interests
2,189
2,012
Equity
49,833
38,177
Total liabilities, redeemable noncontrolling interests and equity
$ 139,057
$
122,810
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in millions)
(unaudited)
Years Ended
December 31,
2017
2016
Operating Activities
Net earnings
$ 10,823
$
7,073
Noncash items:
Depreciation and amortization
2,245
2,055
Deferred income taxes and other
(748 )
(1 )
Share-based compensation
597
485
Net changes in operating assets and liabilities
679
183
Cash flows from operating activities
13,596
9,795
Investing Activities
Purchases of investments, net of sales and maturities
(4,319 )
(5,927 )
Purchases of property, equipment and capitalized software
(2,023 )
(1,705 )
Cash paid for acquisitions, net
(2,131 )
(1,760 )
Other, net
(126 )
37
Cash flows used for investing activities
(8,599 )
(9,355 )
Financing Activities
Common share repurchases
(1,500 )
(1,280 )
Dividends paid
(2,773 )
(2,261 )
Net change in commercial paper and long-term debt
(2,615 )
990
Other, net
3,447
1,540
Cash flows used for financing activities
(3,441 )
(1,011 )
Effect of exchange rate changes on cash and cash equivalents
(5 )
78
Increase (decrease) in cash and cash equivalents
1,551
(493 )
Cash and cash equivalents, beginning of period
10,430
10,923
Cash and cash equivalents, end of period
$ 11,981
$ 10,430
Supplemental Schedule of Noncash Investing Activities:
Common stock issued for acquisition
$
2,164
$
-
UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION
- BUSINESSES
(in millions, except percentages)
(unaudited)
Three Months Ended
Years Ended
December 31,
December 31,
2017
2016
2017
2016
Revenues
UnitedHealthcare
$
41,599
$
37,948
$ 163,257
$ 148,581
Optum
24,392
22,167
91,185
83,593
Eliminations
(13,930 )
(12,580 )
(53,283 )
(47,334 )
Total consolidated revenues
$
52,061
$
47,535
$ 201,159
$ 184,840
Earnings from Operations
UnitedHealthcare
$
1,762
$
1,398
$
8,498
$
7,307
Optum (a)
2,215
1,789
6,711
5,623
Total consolidated earnings from operations
$
3,977
$
3,187
$
15,209
$
12,930
Operating Margin
UnitedHealthcare
4.2 %
3.7 %
5.2 %
4.9 %
Optum
9.1 %
8.1 %
7.4 %
6.7 %
Consolidated operating margin
7.6 %
6.7 %
7.6 %
7.0 %
Revenues
UnitedHealthcare Employer & Individual
$
13,307
$
13,504
$
52,066
$
53,084
UnitedHealthcare Medicare & Retirement
16,390
14,043
65,995
56,329
UnitedHealthcare Community & State
9,938
8,642
37,443
32,945
UnitedHealthcare Global
1,964
1,759
7,753
6,223
OptumHealth
$
5,463
$
4,513
$
20,570
$
16,908
OptumInsight
2,247
2,079
8,087
7,333
OptumRx
17,015
15,857
63,755
60,440
Optum eliminations
(333 )
(282 )
(1,227 )
(1,088 )
(a)
Earnings from operations for Optum for the three months and year
ended December 31, 2017 included $556 and $1,823 for OptumHealth;
$690 and $1,770 for OptumInsight; and $969 and $3,118 for OptumRx,
respectively. Earnings from operations for Optum for the three
months and year ended December 31, 2016 included $420 and $1,428 for
OptumHealth; $563 and $1,513 for OptumInsight; and $806 and $2,682
for OptumRx, respectively.
UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION
- BUSINESS METRICS
UNITEDHEALTHCARE CUSTOMER PROFILE
(in thousands)
People Served
December 31,
September 30,
December 31,
2017
2017
2016
Commercial group:
Risk-based
7,935
7,805
7,470
Fee-based
18,595
18,610
18,900
Total commercial group
26,530
26,415
26,370
Individual
485
515
1,350
Fee-based TRICARE
2,850
2,855
2,860
-
-
-
Total Commercial
29,865
29,785
30,580
Medicare Advantage
4,430
4,390
3,630
Medicaid
6,705
6,375
5,890
Medicare Supplement (Standardized)
4,445
4,415
4,265
Total Public and Senior
15,580
15,180
13,785
Total UnitedHealthcare - Domestic Medical
45,445
44,965
44,365
International
4,080
4,080
4,220
Total UnitedHealthcare - Medical
49,525
49,045
48,585
Supplemental Data
Medicare Part D stand-alone
4,940
4,945
4,930
OPTUM PERFORMANCE METRICS
December 31,
September 30,
December 31,
2017
2017
2016
OptumHealth Consumers Served (in millions)
91
90
83
OptumInsight Contract Backlog (in billions)
$
15.0
$
13.9
$
12.6
OptumRx Quarterly Adjusted Scripts (in millions)
333
321
318
Note: UnitedHealth Group served 139 million unique individuals
across all businesses at December 31, 2017.
UNITEDHEALTH GROUP
2018 OUTLOOK REVISED FOR THE
IMPACT OF TAX REFORM
(in millions, except per share data
and percentages)
Business
Revenue Ranges
Earnings from
Operating Margin
Operations
Range
UnitedHealthcare
$179,000 - $181,000
$9,100 - $9,500
5.0% - 5.3%
Optum
99,000 - 100,000
$7,600 - $7,800
7.6% - 7.9%
Eliminations
(55,000) - (56,000)
Range of
$223,000 - $225,000
$16,700 - $17,300
7.4% - 7.8%
Consolidated UnitedHealth Group
2018 Targets
UnitedHealth Group Medical Care Ratio
81.5% ? 50 bps
Operating Cost Ratio
15.3% ? 30 bps
Depreciation and Amortization
$2,350 - $2,400
EBITDA (a)
$19,050 - $19,700
Investment and Other Income
$1,000 - $1,050
Interest Expense
$1,200 - $1,250
Tax Rate
24%
Net Earnings Attributable to UnitedHealth Group Shareholders
$11,475 - $11,775
Net Margin
5.1% - 5.3%
Diluted Weighted-Average Shares
982 - 987
Diluted Net Earnings Per Common Share to UnitedHealth Group
$11.65 - $11.95
Shareholders
Adjusted Earnings Per Common Share (a)
$12.30 - $12.60
Cash Flows from Operations
$15,000 - $15,500
Dividends Paid (at current rate)
$2,900
Share Repurchase
$3,000 - $4,000
Capital Expenditures
$2,000
(a) See page 7 for a reconciliation of the non-GAAP measures
UNITEDHEALTH GROUP
Reconciliation of Non-GAAP Financial Measures
- Adjusted Net Earnings per Share
- Net Margin Adjusted for Tax Reform
- Adjusted Cash Flows from Operations
- EBITDA
Use of Non-GAAP Financial Measures
Adjusted net earnings per share, adjusted cash flows from
operations, net margin adjusted for tax reform and EBITDA are
non-GAAP financial measures. 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. In addition, adjusted net earnings
per share excludes the earnings impact of the deferred tax
revaluation recognized after The Tax Cuts and Jobs Act of 2017
was enacted in December 2017 and the recognition of the Company’s
estimated share of guaranty association assessments resulting from
the liquidation of Penn Treaty Network America Insurance Company
and its subsidiary (Penn Treaty). Management believes the
exclusion of these items provides a more useful comparison of the
Company’s underlying business performance from period to period.
Management believes that the use of adjusted cash flows from
operations provides investors and management with useful
information to compare our cash flows from operations for the
current period to that of other periods, when the Company does not
receive its monthly payment from the Centers for Medicare and
Medicaid Services (CMS) in the applicable quarter. CMS generally
remits their monthly payments on the first calendar day of the
applicable month. However, if the first calendar day of the month
falls on a weekend or a holiday, CMS has typically paid the
Company on the last business day of the preceding calendar month.
As such, quarterly operating cash flows determined in accordance
with GAAP may occasionally include CMS premium payments for two
months or four months. Adjusted cash flows from operating
activities presents operating cash flows assuming all CMS payments
were received on the first calendar day of the applicable month.
Management believes that the use of net margin adjusted for tax
reform provides investors and management useful information about
the performance of the underlying business prior to the impact of
the deferred tax revaluation recognized in 2017.
Management believes that the use of EBITDA provides investors and
management useful information about our operating earnings before
interest, taxes, depreciation and amortization.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
ADJUSTED NET EARNINGS PER SHARE
Three Months Ended
Years Ended
Projected
December 31,
December 31,
Year Ended
December 31,
2017
2016
2017
2016
2018
GAAP net earnings attributable to UnitedHealth Group common
$
3,617
$
1,684
$ 10,558
$ 7,017
$11,475 to $11,775
shareholders
Tax reform impact
(1,197 )
-
(1,197 )
-
-
Penn Treaty impact
-
350
-
350
-
Intangible amortization
227
222
896
882
835
Tax effect
(85 )
(213 )
(334 )
(454 )
(210)
$
2,562
$
2,043
$
9,923
$ 7,795
$12,100 to $12,400
Adjusted net earnings attributable to UnitedHealth Group common
shareholders
GAAP diluted earnings per share
$
3.65
$
1.74
$
10.72
$
7.25
$11.65 to $11.95
Tax reform impact per share
(1.21 )
-
(1.22 )
-
-
Penn Treaty impact per share
-
0.36
-
0.36
-
Intangible amortization per share
0.23
0.23
0.91
0.91
0.85
Tax effect per share
(0.08 )
(0.22 )
(0.34 )
(0.47 )
(0.20)
Adjusted diluted earnings per share
$
2.59
$
2.11
$
10.07
$
8.05
$12.30 to $12.60
NET MARGIN ADJUSTED FOR TAX REFORM
Three Months
Year Ended
Ended
December 31,
December 31,
2017
2017
GAAP net earnings attributable to UnitedHealth Group common
$
3,617
$ 10,558
shareholders
Tax reform impact
(1,197 )
(1,197 )
$
2,420
$
9,361
Net earnings adjusted for tax reform attributable to UnitedHealth
Group Common shareholders
GAAP net margin
6.9 %
5.2 %
Net margin adjusted for tax reform
4.6 %
4.7 %
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in millions)
(unaudited)
ADJUSTED CASH FLOWS FROM OPERATIONS
Three Months Ended
December 31,
2017
2016
GAAP cash flows from operations
$
(2,577 )
$ (1,409 )
Add: October CMS premium payments received in September
4,568
3,777
Adjusted cash flows from operations
$
1,991
$
2,368
EBITDA
Projected Year Ended
December 31, 2018
GAAP net earnings
$11,800 to $12,200
Provision for income taxes
3,700 - 3,850
Interest expense
1,200 - 1,250
Depreciation and amortization
2,350 - 2,400
EBITDA
$19,050 to $19,700

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SOURCE: UnitedHealth Group

UnitedHealth Group
Investors:
Brett Manderfeld, 952-936-7216
Vice President
or
John S. Penshorn, 952-936-7214
Senior Vice President
or
Media:
Tyler Mason, 424-333-6122
Vice President