10-QPeriod: Q1 FY2011

UNITEDHEALTH GROUP INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 3, 2011For Securities:UNH

Summary

UnitedHealth Group Inc. (UNH) reported strong financial performance for the first quarter ended March 31, 2011. Total revenues increased by 10% year-over-year to $25.43 billion, driven by robust growth in both its UnitedHealthcare (Health Benefits) and Optum (Health Services) platforms. Net earnings saw a significant increase of 13% to $1.35 billion, with diluted earnings per share rising 18% to $1.22. This growth reflects strong organic expansion in risk-based offerings and success across its various business units, including acquisitions within the Optum segment. The company maintained a stable medical care ratio and operating cost ratio, demonstrating effective cost management despite a 9% increase in medical costs primarily due to membership growth and rising service costs, partially offset by moderated utilization. The company also highlighted its commitment to returning capital to shareholders, with significant share repurchases and dividend payments. UNH's solid liquidity position, bolstered by operating cash flows and available credit facilities, positions it well to navigate the evolving healthcare landscape, including the impacts of the Patient Protection and Affordable Care Act.

Financial Highlights

51 data points
Beta

Revenue

$25.43B

97.6% Gross Margin

Net Income

$1.35B

5.3% Net Margin

EPS (Diluted)

$1.22

Total Assets

$65.33B

Cash & Equivalents

$9.79B

Free Cash Flow

$1.01B

Financial Statements
Beta
Revenue$25.43B
Cost of Revenue$599.00M
Gross Profit$24.83B
SG&A Expenses$3.62B
Operating Expenses$23.21B
Operating Income$2.22B
Interest Expense$118.00M
Net Income$1.35B
EPS (Basic)$1.24
EPS (Diluted)$1.22
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Total revenues increased by 10% to $25.43 billion, driven by strong performance in both UnitedHealthcare and Optum segments.
  • 2Net earnings grew by 13% to $1.35 billion, with diluted EPS up 18% to $1.22.
  • 3UnitedHealthcare segment revenue grew 9% to $23.87 billion, serving over 33.9 million individuals.
  • 4Optum segment revenue increased 20% to $6.81 billion, fueled by acquisitions and growth in OptumHealth and OptumInsight.
  • 5Medical costs increased 9% to $18.73 billion, but the medical care ratio remained stable at 81.4%.
  • 6Operating costs increased 10% to $3.62 billion, while operating cost ratio remained stable at 14.2%.
  • 7The company repurchased approximately 14.9 million shares of common stock in the quarter for $620 million.

Frequently Asked Questions

Revenue growth was driven by strong organic growth in risk-based offerings within the UnitedHealthcare businesses and revenue growth across all Optum businesses. This includes contributions from acquisitions within the Optum segment.

While medical costs increased by 9% due to membership growth and rising service costs, the company maintained a stable medical care ratio. This was achieved through moderated health system utilization (partially influenced by weather), effective cost management disciplines, negotiation of favorable care provider contracts, and care coordination programs.

The company acknowledges the Health Reform Legislation expands access to coverage and modifies various aspects of the health care market. While it presents both opportunities and challenges, UNH believes its diversified business model is well-positioned to address market changes. Specific impacts discussed include potential medical loss ratio rebates, changes in Medicare Advantage reimbursements, and the ongoing uncertainty from legal challenges and regulatory interpretations.

UnitedHealth Group is actively returning capital to shareholders through a combination of common stock repurchases and dividend payments. In the first quarter of 2011, the company repurchased approximately 14.9 million shares for $620 million and paid a cash dividend of $0.125 per share.