10-QPeriod: Q3 FY2019

UNITEDHEALTH GROUP INC Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 6, 2019For Securities:UNH

Summary

UnitedHealth Group Inc. reported strong financial results for the nine months ended September 30, 2019, with total revenues growing 8% to $181.25 billion and net earnings attributable to common shareholders increasing by 15% to $10.3 billion. This growth was driven by solid performance across both its UnitedHealthcare and Optum segments. The company demonstrated robust operational execution, reflected in a 9% increase in consolidated earnings from operations for the third quarter and a 13% rise in diluted earnings per share for the nine-month period. Financially, the company maintained a strong balance sheet with total assets of $173.7 billion and total equity of $57.8 billion. Cash flows from operations remained healthy, generating $12.3 billion for the nine months. The company also actively returned capital to shareholders through share repurchases and an increased dividend. Acquisitions played a significant role in growth, with $9.7 billion invested in business combinations during the period, contributing to the expansion of its OptumHealth and OptumInsight segments.

Financial Highlights

54 data points
Beta

Revenue

$60.35B

89.0% Gross Margin

Net Income

$3.54B

5.9% Net Margin

EPS (Diluted)

$3.67

Total Assets

$173.71B

Cash & Equivalents

$12.36B

Free Cash Flow

$2.71B

Financial Statements
Beta
Revenue$60.35B
Cost of Revenue$6.63B
Gross Profit$53.72B
SG&A Expenses$8.96B
Operating Expenses$55.34B
Operating Income$5.01B
Interest Expense$449.00M
Net Income$3.54B
EPS (Basic)$3.73
EPS (Diluted)$3.67
Shares Outstanding (Basic)949.00M
Shares Outstanding (Diluted)963.00M

Key Highlights

  • 1Total revenues increased by 8% year-over-year to $181.25 billion for the first nine months of 2019.
  • 2Net earnings attributable to common shareholders grew 15% to $10.3 billion for the first nine months of 2019.
  • 3Consolidated earnings from operations increased 9% in the third quarter of 2019 compared to the prior year.
  • 4Diluted earnings per share saw a significant increase of 13% for the third quarter and 17% for the nine months ended September 30, 2019.
  • 5UnitedHealthcare served 415,000 additional people year-over-year, driven by Medicare Advantage growth and acquisitions.
  • 6Optum segment revenues grew 13% in the third quarter, reflecting strong performance across OptumHealth, OptumInsight, and OptumRx.
  • 7The company invested $9.7 billion in business combinations during the first nine months of 2019, indicating a strategic focus on growth through acquisitions.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of individuals served across Medicare Advantage and Commercial segments, pricing trends, and significant acquisition and organic growth within the Optum business, particularly in pharmacy care services and care delivery. The return of the Health Insurance Industry Tax after a moratorium in 2019 also impacted year-over-year revenue comparisons.

Acquisitions were a significant contributor to growth, particularly in the OptumHealth and OptumInsight segments. During the first nine months of 2019, the company completed business combinations totaling $9.7 billion, which contributed to expanded services in care delivery, specialty pharmacy, and managed services. The impact on revenues and net earnings from these acquisitions was not material in the initial periods.

UnitedHealth Group maintained a strong financial position. Total assets stood at $173.7 billion, with total liabilities at $114.0 billion and total equity at $57.8 billion as of September 30, 2019. Cash flow from operations was robust, generating $12.3 billion for the nine months. The company had significant cash and cash equivalents and investments totaling $50.4 billion. Its debt-to-equity ratio was approximately 41%, well within its debt covenant limits, and it had substantial undrawn credit facilities available.

Medical costs increased due to growth in people served and medical cost trends, partly offset by favorable prior-year development. The medical care ratio (MCR) increased to 82.4% for the third quarter and 82.5% for the nine months ended September 30, 2019, up from 81.0% and 81.4% in the prior year periods, respectively. This increase was primarily influenced by the revenue effects of the Health Insurance Industry Tax moratorium.