10-QPeriod: Q2 FY2017

UNITEDHEALTH GROUP INC Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 4, 2017For Securities:UNH

Summary

UnitedHealth Group's second-quarter 2017 report indicates robust financial performance with a significant increase in both revenues and earnings. Total revenues grew by 8% year-over-year to $50.1 billion, driven by strong organic growth across its UnitedHealthcare and Optum segments. Net earnings attributable to common shareholders surged by 30% to $2.3 billion. The company's strategic initiatives and operational efficiencies are reflected in the improved profitability, with earnings from operations increasing by 16%. UnitedHealthcare saw a notable expansion in its Medicare Advantage and Medicaid offerings, serving an additional 1.5 million people overall. Optum also demonstrated strong growth, with all its sub-segments — OptumHealth, OptumInsight, and OptumRx — contributing to a 10% increase in Optum's total revenue.

Financial Highlights

55 data points
Beta

Revenue

$50.05B

88.2% Gross Margin

Net Income

$2.28B

4.6% Net Margin

EPS (Diluted)

$2.32

Total Assets

$138.10B

Cash & Equivalents

$14.58B

Free Cash Flow

$1.75B

Financial Statements
Beta
Revenue$50.05B
Cost of Revenue$5.89B
Gross Profit$44.16B
SG&A Expenses$7.33B
Operating Expenses$46.32B
Operating Income$3.73B
Interest Expense$301.00M
Net Income$2.28B
EPS (Basic)$2.37
EPS (Diluted)$2.32
Shares Outstanding (Basic)964.00M
Shares Outstanding (Diluted)985.00M

Key Highlights

  • 1Total revenues increased by 8% to $50.1 billion for the three months ended June 30, 2017, compared to $46.5 billion in the prior year period.
  • 2Net earnings attributable to UnitedHealth Group common shareholders rose by 30% to $2.3 billion, or $2.32 per diluted share, for the quarter.
  • 3Earnings from operations grew by 16% to $3.7 billion, showcasing improved profitability across the business.
  • 4UnitedHealthcare served approximately 1.5 million more individuals, highlighting growth in its health benefits segment, particularly in Medicare Advantage and Medicaid.
  • 5Optum segment revenues increased by 10% to $22.7 billion, driven by strong performance across OptumHealth, OptumInsight, and OptumRx.
  • 6The company's effective income tax rate decreased significantly to 31.5% from 40.0% in the prior year, largely due to a moratorium on the Health Insurance Industry Tax.
  • 7Cash flows from operating activities were strong, reaching $8.6 billion for the six months ended June 30, 2017, supported by substantial premium payments.

Frequently Asked Questions

Revenue growth was primarily driven by organic increases in the number of individuals served across its health benefits businesses (UnitedHealthcare) and continued expansion within all of Optum's businesses. This was partially offset by strategic withdrawals from certain individual ACA-compliant products and the temporary impact of the Health Insurance Industry Tax moratorium.

Earnings from operations increased by 16% year-over-year. This improvement was due to a combination of strong revenue growth, effective medical cost management, and operational efficiencies realized across both the UnitedHealthcare and Optum segments, leading to higher operating margins.

The report indicates substantial growth in Medicare Advantage and Medicaid membership. Medicare Advantage enrollment increased by 22% year-over-year, and Medicaid enrollment grew by 12%. This growth is attributed to strong performance in individual and employer-sponsored Medicare Advantage plans and expansion in state-based Medicaid programs.

The moratorium on the Health Insurance Industry Tax for 2017 has led to a lower effective income tax rate for the company, contributing to improved net earnings. The report notes this moratorium as a key factor in the decrease of the effective tax rate from 40.0% to 31.5% for the quarter.