10-QPeriod: Q3 FY2012

UNITEDHEALTH GROUP INC Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 30, 2012For Securities:UNH

Summary

UnitedHealth Group Inc. (UNH) reported a strong third quarter ending September 30, 2012, with significant year-over-year growth in both revenues and net earnings. Total revenues increased by 8%, reaching $27.3 billion for the quarter, and net earnings saw a substantial 23% jump to $1.6 billion. Diluted earnings per share also rose by 28% to $1.50, indicating improved profitability on a per-share basis. The company's UnitedHealthcare segment, its largest, demonstrated robust performance with an 8% revenue increase, driven by strong growth in Medicare Advantage and Medicaid membership, alongside expansion in fee-based commercial products. The Optum segment also contributed positively, with OptumHealth and OptumInsight showing double-digit revenue growth. This growth was achieved while managing medical costs effectively, as indicated by a decrease in the consolidated medical care ratio.

Financial Highlights

53 data points
Beta

Revenue

$27.30B

97.7% Gross Margin

Net Income

$1.56B

5.7% Net Margin

EPS (Diluted)

$1.50

Total Assets

$71.70B

Cash & Equivalents

$8.92B

Free Cash Flow

-$619.00M

Financial Statements
Beta
Revenue$27.30B
Cost of Revenue$627.00M
Gross Profit$26.68B
SG&A Expenses$4.28B
Operating Expenses$24.69B
Operating Income$2.61B
Interest Expense$158.00M
Net Income$1.56B
EPS (Basic)$1.52
EPS (Diluted)$1.50
Shares Outstanding (Basic)1.02B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Total revenues increased by 8% to $27.3 billion for the three months ended September 30, 2012.
  • 2Net earnings grew by 23% to $1.6 billion, and diluted EPS increased by 28% to $1.50.
  • 3UnitedHealthcare segment revenues rose 8%, supported by a 6% increase in total medical membership, including significant growth in Medicare Advantage (18%) and Medicaid (11%).
  • 4Optum segment revenues remained stable for the quarter, but OptumHealth and OptumInsight showed strong double-digit revenue growth of 19% and 15% respectively.
  • 5The consolidated medical care ratio improved by 170 basis points to 79.0%, reflecting effective cost management.
  • 6The company repurchased $2.6 billion of common stock in the first nine months of 2012 and increased its quarterly dividend to $0.2125 per share.
  • 7UnitedHealth Group announced its intent to acquire 90% of Amil Participações S.A., a major health care company in Brazil, for approximately $4.7 billion, signaling international expansion.

Frequently Asked Questions

UnitedHealth Group reported an 8% increase in total revenues to $27.3 billion and a 23% increase in net earnings to $1.6 billion for the third quarter ended September 30, 2012, compared to the same period in 2011. Diluted earnings per share also saw a significant increase of 28% to $1.50.

The UnitedHealthcare segment's revenue growth was primarily driven by an 8% increase in total revenues, fueled by growth in the number of individuals served, commercial premium rate increases related to expected medical cost trends, and the impact of lower expected premium rebates. Notably, Medicare Advantage membership grew by 18% and Medicaid membership by 11%.

The company is effectively managing medical costs, which is reflected in a decrease in the consolidated medical care ratio by 170 basis points to 79.0%. This improvement was attributed to lower than expected health system utilization levels, increased efficiency in claims handling and processing, and favorable medical reserve development, alongside effective medical cost management strategies.

A major strategic announcement was the intent to acquire approximately 90% of Amil Participações S.A., a leading health care company in Brazil. This acquisition, funded partly by new debt issuances, signals a significant step in the company's international expansion strategy.