10-QPeriod: Q1 FY2019

UNITEDHEALTH GROUP INC Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 7, 2019For Securities:UNH

Summary

UnitedHealth Group (UNH) reported a strong first quarter for 2019, demonstrating robust revenue growth and significant increases in earnings. Total revenues rose by 9% year-over-year to $60.3 billion, driven by an 8% increase in UnitedHealthcare revenues and a substantial 12% growth in Optum revenues. This top-line performance translated into a 19% increase in earnings from operations to $4.8 billion, and a 22% rise in net earnings attributable to common shareholders to $3.5 billion. Diluted earnings per share also saw a healthy increase of 24% to $3.56. The company's operational efficiency improved, with a decrease in the operating cost ratio and an increase in operating margin. UnitedHealthcare served approximately 880,000 more people, primarily due to growth in Medicare Advantage and self-funded employer services. Optum's diversified businesses, including OptumHealth, OptumInsight, and OptumRx, all contributed positively to revenue and earnings growth. The company maintained a strong balance sheet with significant cash and investment balances, and a healthy return on equity of 26.8%.

Financial Highlights

53 data points
Beta

Revenue

$60.31B

87.8% Gross Margin

Net Income

$3.47B

5.7% Net Margin

EPS (Diluted)

$3.56

Total Assets

$161.20B

Cash & Equivalents

$12.41B

Free Cash Flow

$2.67B

Financial Statements
Beta
Revenue$60.31B
Cost of Revenue$7.38B
Gross Profit$52.93B
SG&A Expenses$8.52B
Operating Expenses$55.48B
Operating Income$4.83B
Interest Expense$400.00M
Net Income$3.47B
EPS (Basic)$3.62
EPS (Diluted)$3.56
Shares Outstanding (Basic)958.00M
Shares Outstanding (Diluted)975.00M

Key Highlights

  • 1Total revenues increased 9% to $60.3 billion compared to the prior year's first quarter.
  • 2Net earnings attributable to UnitedHealth Group common shareholders grew 22% to $3.5 billion.
  • 3Diluted earnings per share increased by 24% to $3.56.
  • 4UnitedHealthcare served 880,000 additional people, with significant growth in Medicare Advantage.
  • 5Optum revenues grew 12%, driven by strong performance across its sub-segments (OptumHealth, OptumInsight, OptumRx).
  • 6Earnings from operations increased by 19% to $4.8 billion.
  • 7Return on Equity improved to 26.8% from 23.8% in the prior year.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of individuals served across various Medicare products, positive pricing trends, and overall growth in the Optum business, particularly in pharmacy care services and care delivery. The increase in people served by UnitedHealthcare, especially in Medicare Advantage, was a key contributor.

The one-year moratorium on the Health Insurance Industry Tax in 2019 had a notable impact on year-over-year comparability. It led to an increase in reported revenues and medical costs, an improvement in the Medical Care Ratio (MCR), a decrease in the operating cost ratio, and a lower effective tax rate compared to the prior year.

UnitedHealth Group endeavors to mitigate increases in medical costs by engaging physicians and consumers with information and support to make clinically sound choices, aiming to facilitate high-quality, affordable care. This includes managing changes in unit costs, health system utilization, and prescription drug costs.

As of March 31, 2019, UnitedHealth Group had approximately $47.0 billion in cash, cash equivalents, and investment securities. The company utilizes cash flows from operations, commercial paper, bank credit facilities, and long-term debt to fund its obligations, share repurchases, and dividends. The company maintained a debt-to-equity ratio of approximately 40% at the end of the quarter.