10-QPeriod: Q2 FY2015

UNITEDHEALTH GROUP INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 29, 2015For Securities:UNH

Summary

UnitedHealth Group Inc. (UNH) reported solid financial results for the second quarter and first half of 2015, demonstrating continued growth and operational strength. Total revenues saw an 11% increase year-over-year for the quarter and 12% for the first half, driven by robust performance in both the UnitedHealthcare and Optum segments. The company highlighted significant growth in the number of individuals served, particularly in Medicare Advantage and Medicaid, as well as expansion within its Optum businesses. Profitability also improved, with earnings from operations up 13% and diluted earnings per share increasing 15% for the quarter. The company also announced the significant acquisition of Catamaran Corporation for $12.9 billion, signaling a strategic move to enhance its OptumRx business, which closed shortly after the reporting period. Financially, UNH maintained a strong liquidity position and healthy cash flows from operations, which increased by 42% year-over-year for the first half. The company also demonstrated its commitment to shareholder returns by increasing its quarterly cash dividend. Despite ongoing industry pressures such as regulatory changes and medical cost trends, UnitedHealth Group continues to execute its growth strategy, leveraging its diversified business model and technological capabilities to navigate the evolving healthcare landscape.

Financial Highlights

55 data points
Beta

Revenue

$36.26B

96.9% Gross Margin

Net Income

$1.58B

4.4% Net Margin

EPS (Diluted)

$1.64

Total Assets

$91.42B

Cash & Equivalents

$7.89B

Free Cash Flow

$820.00M

Financial Statements
Beta
Revenue$36.26B
Cost of Revenue$1.12B
Gross Profit$35.14B
SG&A Expenses$5.74B
Operating Expenses$33.37B
Operating Income$2.90B
Interest Expense$151.00M
Net Income$1.58B
EPS (Basic)$1.66
EPS (Diluted)$1.64
Shares Outstanding (Basic)952.00M
Shares Outstanding (Diluted)966.00M

Key Highlights

  • 1Total revenues increased by 11% to $36.3 billion for Q2 2015 and 12% to $72.0 billion for the first half of 2015, year-over-year.
  • 2Earnings from operations grew by 13% to $2.9 billion for Q2 2015 and 20% to $5.5 billion for the first half of 2015.
  • 3Diluted earnings per common share rose by 15% to $1.64 for Q2 2015 and 23% to $3.10 for the first half of 2015.
  • 4The company served an additional 1.6 million people domestically in its UnitedHealthcare segment during Q2 2015.
  • 5Cash flows from operating activities increased significantly by 42% to $3.4 billion for the first half of 2015.
  • 6UnitedHealth Group acquired Catamaran Corporation for $12.9 billion in cash on July 23, 2015, to expand its OptumRx offerings.
  • 7The company increased its quarterly cash dividend to an annual rate of $2.00 per share in June 2015.

Frequently Asked Questions

UnitedHealth Group's total revenues increased by 11% to $36.3 billion in the second quarter of 2015 compared to the same period in 2014.

The acquisition of Catamaran Corporation closed on July 23, 2015, after the reporting period ended June 30, 2015. Therefore, its financial impact is not reflected in this 10-Q filing, though the MD&A notes transaction costs related to the acquisition for OptumRx in the first half of 2015 and mentions the acquisition was funded by new indebtedness.

The company noted that while the 2016 Final Rate notice from CMS provided some stability with an average increase of 125 basis points, these rates still trail the rising cost of medical care, creating continued pressure on the Medicare Advantage program. Quality bonus payments, previously available to plans rated 3 stars or higher, are now exclusively for plans rated 4 stars and higher starting in 2015.

Cash flows provided by operating activities showed substantial improvement, increasing by 42% to $3.4 billion for the first half of 2015 compared to the same period in 2014, driven by higher net earnings and growth in risk-based products.