01—Abstract
Summary
Summary of the 10-K filed February 8, 2017. Cited figures are marked; the original filing is the authoritative source.
UnitedHealth Group Inc.'s (UNH) 2016 10-K filing highlights a strong year of growth, with total revenues reaching $184.84 billiona, an 18% increase year-over-year, driven by robust performance across both its UnitedHealthcare and Optum segments.
Diluted earnings per share saw a significant 21% increase to $7.25b, reflecting effective cost management and strategic growth initiatives. The company continues to expand its reach, serving an additional 2.1 million people domestically through its UnitedHealthcare benefits. Optum also demonstrated substantial growth, with revenues increasing by 24%, bolstered by its Health, Insight, and Rx businesses.
Despite a challenging regulatory environment and pressures on Medicare Advantage funding, UNH maintained strong operational execution. The company highlighted its proactive approach to managing medical costs through integrated care management and value-based payment models, which are increasingly being adopted across provider networks. Furthermore, UNH is strategically navigating changes in the healthcare landscape, including a reduced participation in individual public exchanges, while continuing to invest in its diversified business platforms for long-term growth and value creation for shareholders.
02—Key points
Key Highlights
- Consolidated revenues grew by 18% to $184.84 billion, driven by a 13% increase in UnitedHealthcare revenues and a 24% increase in Optum revenues.
- Diluted earnings per share (EPS) increased by 21% to $7.25, demonstrating strong profitability.
- UnitedHealthcare expanded its domestic reach, serving an additional 2.1 million people.
- Optum businesses showed significant growth, with OptumRx revenue up 25% due to the full-year impact of the Catamaran acquisition and organic growth.
- Earnings from operations increased by 17% to $12.93 billion, with UnitedHealthcare earnings up 8% and Optum earnings up 32%.
- The company maintained a strong financial position, with cash flows from operations reaching $9.8 billion.
- UnitedHealthcare Medicare & Retirement served 3.6 million people through its Medicare Advantage products, and UnitedHealthcare Community & State served 5.9 million beneficiaries across 24 states and D.C.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, UnitedHealth Group Inc kept $0.04.
- Revenue$184.84B100.0%
- Cost of revenue−$24.42B13.2%
- Gross profit$160.42B86.8%
- Operating costs−$147.49B79.8%
- Operating income$12.93B7.0%
- Interest, other & tax−$5.91B3.2%
- Net income$7.02B3.8%
Where FY2016 revenue went
$184.84B- Other operating costs: $119.09B, 64% of revenue
- SG&A: $28.40B, 15% of revenue
- Cost of revenue: $24.42B, 13% of revenue
- Net income: $7.02B, 3.8% of revenue
- Interest, other & tax: $5.91B, 3.2% of revenue
Kept 3.8% as net incomeNet income $7.02B · 3.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 8, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $184.84B$157.11B | +17.7% |
| Cost of Revenue | $24.42B$16.21B | +50.7% |
| Gross Profit | $160.42B$140.90B | +13.9% |
| SG&A Expenses | $28.40B$24.31B | +16.8% |
| Operating Expenses | $171.91B$146.09B | +17.7% |
| Operating Income | $12.93B$11.02B | +17.3% |
| Interest Expense | $1.07B$790.00M | +35.1% |
| Net Income | $7.02B$5.81B | +20.7% |
| EPS (Basic) | $7.37$6.10 | +20.8% |
| EPS (Diluted) | $7.25$6.01 | +20.6% |
| Shares Outstanding (Basic) | 952.00M953.00M | −0.1% |
| Shares Outstanding (Diluted) | 968.00M967.00M | +0.1% |
05—Questions
Frequently Asked Questions
What were the key drivers of UnitedHealth Group's revenue growth in 2016?
Revenue growth was primarily driven by the expansion in the number of individuals served across UnitedHealthcare's benefits businesses, particularly in Commercial risk-based group, Medicare Advantage, and Medicaid programs. Optum's businesses also contributed significantly to revenue growth, with OptumRx benefiting from the full-year impact of the Catamaran acquisition and organic growth across all Optum segments.
How did the company manage medical costs in 2016?
UnitedHealth Group managed medical costs through a combination of medical management initiatives, negotiation of favorable provider contracts, and growth in value-based care arrangements. Despite overall medical cost increases due to membership growth and trends, the company's medical care ratio remained relatively stable at 81.2%.
What is the company's strategy regarding individual public exchanges?
Recognizing a challenging market and incurring losses, UnitedHealth Group significantly reduced its participation in individual public exchanges. In 2016, it participated in 34 states, but for 2017, it planned to reduce participation to only three states, expecting to serve approximately 1 million fewer consumers through individual insurance plans.
How did the acquisition of Catamaran impact the company's financial results?
The acquisition of Catamaran Corporation in the third quarter of 2015 significantly impacted 2016 results, particularly for OptumRx, contributing to a 25% revenue increase in that segment. The acquisition also led to a substantial increase in goodwill and intangible assets.
06—Continue