UNH
$267.27
Unitedhealth Group
($.56)
(.21%)
Earnings Details
4th Quarter December 2019
Wednesday, January 15, 2020 5:55:00 AM
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Summary

Unitedhealth Group Beats

Unitedhealth Group (UNH) reported 4th Quarter December 2019 earnings of $3.90 per share on revenue of $60.9 billion. The consensus earnings estimate was $3.77 per share on revenue of $61.2 billion. The Earnings Whisper number was $3.86 per share. Revenue grew 4.3% on a year-over-year basis.

The company said it continues to expect 2020 earnings of $16.25 to $16.55 per share. The current consensus earnings estimate is $16.45 per share for the year ending December 31, 2020.

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
$3.90
Earnings Whisper
$3.86
Consensus Estimate
$3.77
Reported Revenue
$60.90 Bil
Revenue Estimate
$61.15 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

UnitedHealth Group Reports 2019 Results

  • Full Year Revenues of $242 Billion Grew $16 Billion or 7% Year-Over-Year
  • Full Year and Fourth Quarter Net Earnings Per Share of $14.33 and $3.68 Grew 18% and 19% Year-Over-Year
  • Full Year and Fourth Quarter Adjusted Net Earnings Per Share of $15.11 and $3.90 Grew 17% and 19% Year-Over-Year
  • Full Year Cash Flows from Operations were $18.5 Billion

MINNETONKA, Minn.--(BUSINESS WIRE)--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%

 
  • UnitedHealth Group’s full year 2019 revenues of $242.2 billion grew $15.9 billion or 7.0 percent year-over-year, reflecting balanced, broad-based revenue growth across the businesses.
  • Full year 2019 earnings from operations grew $2.3 billion or 13.5 percent year-over-year to $19.7 billion, with both UnitedHealthcare and Optum contributing strongly.
  • Full year adjusted net earnings grew 17.3 percent to $15.11 per share, with fourth quarter adjusted net earnings growing 18.9 percent to $3.90 per share.
  • Cash flows from operations in 2019 of $18.5 billion, or 1.3 times net income, grew 17.5 percent year-over-year. Fourth quarter cash flows were stronger than anticipated, partly on timing factors.
  • The full year 2019 medical care ratio of 82.5 percent increased from 81.6 percent in 2018, as the impact of the health insurance tax deferral was partially offset by improved medical cost-efficiency. Favorable medical reserve development was $270 million in the quarter, with $150 million related to 2019 and $120 million related to previous years. Year end days claims payable were 50.8 days compared to 49.3 days in the third quarter 2019 and 49.5 in the fourth quarter 2018.
  • The full year 2019 operating cost ratio of 14.5 percent declined from 15.1 percent in 2018, as the health insurance tax deferral and operating efficiencies were partially offset by business mix changes and investments in service, innovation and growth.
  • Return on equity of 25.7 percent in 2019 reflected the Company’s strong overall operating performance and efficient capital structure. The debt to total capital ratio was 40.2 percent at December 31, 2019, full year dividend payments grew 18.4 percent year-over-year to $3.9 billion, and the Company repurchased 22.4 million shares for $5.5 billion in 2019.

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%

 
  • UnitedHealthcare full year revenues of $193.8 billion increased by $10.4 billion, or 5.6 percent, primarily due to growth in people served in Medicare Advantage and commercial benefits. Full year earnings from operations grew $1.2 billion or 13.3 percent to $10.3 billion. Fourth quarter 2019 earnings from operations increased $278 million year-over-year, with positive contributions coming from each of the benefits businesses.
    • UnitedHealthcare Employer & Individual full year 2019 revenues of $56.9 billion increased $2.2 billion year-over-year, as UnitedHealthcare served 845,000 more people with commercial benefits, including growth in both commercial risk and fee based products.
    • UnitedHealthcare Medicare & Retirement revenues grew by $7.8 billion or 10.3 percent to $83.3 billion in 2019, as the business grew to serve 5.3 million people in Medicare Advantage at year end, an increase of 325,000 in 2019. Medicare Advantage growth was diversified, reflecting strong performance in both the individual and group retiree markets.
    • UnitedHealthcare Community & State 2019 revenues grew modestly year-over-year to $43.8 billion as growth in serving more people with complex conditions was nearly offset by proactive market withdrawals, as well as states balancing carriers and managing eligibility.
    • UnitedHealthcare Global revenues for full year 2019 were stable year-over-year at $9.9 billion.

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%

 

 

 

 

 

 

  • Optum 2019 full year revenues grew by $11.7 billion or 11.5 percent year-over-year to $113.0 billion, with notably strong growth in OptumHealth. Full year earnings from operations advanced $1.1 billion or 13.7 percent year-over-year to $9.4 billion, driven by strong revenue growth and 20 basis points of operating margin expansion to 8.3 percent. Each Optum business had double-digit operating earnings growth for the full year.
    • OptumHealth full year revenues of $30.3 billion in 2019 expanded $6.2 billion or 25.6 percent year-over-year. OptumHealth served approximately 96 million people at year end 2019 and revenue per consumer served increased 26 percent year-over-year in the quarter, driven by growth in value-based care arrangements.
    • OptumInsight revenues grew 11.1 percent to $10.0 billion in 2019, reflecting continued growth and expansion in managed services, which contributed strongly to OptumInsight’s contract backlog growth of 13.5 percent or $2.3 billion year-over-year to $19.3 billion.
    • OptumRx revenues advanced $4.8 billion in 2019 or 6.8 percent year-over-year to $74.3 billion reflecting a growing mix of diversified pharmacy care services. OptumRx fulfilled 1.34 billion adjusted scripts in 2019, consistent with 2018 despite the effects of a previously announced large client transition.

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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Investors:
Brett Manderfeld
Senior Vice President
952-936-7216

Media:
Matt Stearns
Senior Vice President
202-276-0085

Source: UnitedHealth Group