10-QPeriod: Q1 FY2009

UNITEDHEALTH GROUP INC Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 7, 2009For Securities:UNH

Summary

UnitedHealth Group (UNH) reported solid financial results for the first quarter ended March 31, 2009. Total revenues grew by 8% year-over-year to $22.0 billion, primarily driven by a significant increase in premium revenues within its Health Care Services segment, bolstered by growth in public and senior markets and premium rate increases. Despite a slight decrease in earnings from operations, diluted earnings per share saw a modest increase to $0.81. The company also demonstrated strong operational cash flow generation, increasing by 297% to $1.1 billion, largely due to favorable changes in medical cost payables. The company maintained a stable medical care ratio and managed its operating costs effectively, with a slight improvement in the operating cost ratio, partly due to a one-time release of executive retirement plan accrual. UNH continues to execute on its growth strategies, including strategic acquisitions and a robust share repurchase program, underscoring its commitment to shareholder value. The company's diversified business model and strong liquidity position provide resilience amidst prevailing economic conditions.

Financial Highlights

31 data points
Beta

Revenue

$22.00B

98.2% Gross Margin

Net Income

$984.00M

4.5% Net Margin

EPS (Diluted)

$0.81

Cash & Equivalents

$7.89B

Free Cash Flow

$952.00M

Financial Statements
Beta
Revenue$22.00B
Cost of Revenue$404.00M
Gross Profit$21.60B
SG&A Expenses$3.13B
Operating Expenses$20.34B
Operating Income$1.67B
Interest Expense$131.00M
Net Income$984.00M
EPS (Basic)$0.82
EPS (Diluted)$0.81
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Total revenues increased 8% to $22.0 billion, driven by strong premium growth in Health Care Services.
  • 2Diluted earnings per share rose to $0.81, a 4% increase compared to the prior year period.
  • 3Cash flows from operating activities surged by 297% to $1.1 billion, indicating strong cash generation.
  • 4The company maintained a stable medical care ratio of 82.4%.
  • 5Operating margin slightly decreased to 7.6% from 8.4% in the prior year, impacted by lower investment income and a shift in business mix.
  • 6UNH repurchased 32 million shares of common stock for $689 million during the quarter.
  • 7The company has significant liquidity with $22.1 billion in cash, cash equivalents, and investments.

Frequently Asked Questions

Consolidated revenues increased by 8% to $22.0 billion for the three months ended March 31, 2009, compared to $20.3 billion for the same period in 2008. This growth was primarily driven by a significant increase in premium revenues within the Health Care Services segment, bolstered by growth in public and senior markets and premium rate increases.

Diluted net earnings per common share increased by 4% to $0.81 for the first quarter of 2009, up from $0.78 in the first quarter of 2008. While earnings from operations saw a slight decrease of $45 million to $1.7 billion, the increase in EPS was supported by a reduction in shares outstanding due to share repurchases and a lower interest expense.

UnitedHealth Group reported a substantial increase in cash flows from operating activities, up 297% to $1.1 billion, primarily due to favorable changes in medical cost payables related to membership growth in risk-based products. The company maintains strong liquidity with $22.1 billion in cash, cash equivalents, and investments as of March 31, 2009.

The company acknowledges the impact of the current recessionary economic environment on demand for certain products and expects slower revenue growth. It also notes potential impacts from proposed health care reforms, including possible reductions in Medicare Advantage reimbursements. UNH is implementing strategies to adapt, such as adjusting benefits, optimizing geographic participation, and intensifying cost management.