10-QPeriod: Q3 FY2021

UNITEDHEALTH GROUP INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 3, 2021For Securities:UNH

Summary

UnitedHealth Group (UNH) demonstrated strong financial performance in the third quarter and the first nine months of 2021, with significant revenue growth across its UnitedHealthcare and Optum segments. Total revenues increased by 11% for the quarter and 12% year-to-date, driven by growth in individuals served, particularly in Medicare Advantage and Medicaid programs, as well as expansion in Optum's care delivery and managed services. Net earnings attributable to common shareholders saw a substantial increase of 29% for the quarter, reaching $4.086 billion, contributing to a slight increase for the year-to-date period. Diluted earnings per share also improved significantly. The company's operational efficiency is highlighted by a decrease in the operating cost ratio, partly due to the repeal of the Health Insurance Tax. UNH continues to strategically deploy capital through share repurchases and dividends, while also advancing a significant acquisition of Change Healthcare, signaling confidence in future growth prospects.

Financial Highlights

55 data points
Beta

Revenue

$72.34B

89.2% Gross Margin

Net Income

$4.09B

5.6% Net Margin

EPS (Diluted)

$4.28

Total Assets

$213.04B

Cash & Equivalents

$21.09B

Free Cash Flow

$6.95B

Financial Statements
Beta
Revenue$72.34B
Cost of Revenue$7.80B
Gross Profit$64.53B
SG&A Expenses$10.72B
Operating Expenses$66.63B
Operating Income$5.71B
Interest Expense$422.00M
Net Income$4.09B
EPS (Basic)$4.33
EPS (Diluted)$4.28
Shares Outstanding (Basic)943.00M
Shares Outstanding (Diluted)955.00M

Key Highlights

  • 1Total revenues grew 11% year-over-year to $72.3 billion for the third quarter and 12% to $213.9 billion for the first nine months of 2021.
  • 2Net earnings attributable to UnitedHealth Group common shareholders increased by 29% to $4.086 billion in Q3 2021.
  • 3UnitedHealthcare saw an 11% revenue increase, driven by a 5% growth in total domestic medical members served (44.9 million).
  • 4Optum segment revenues grew 14% in Q3 2021, with OptumHealth showing particularly strong growth (32%).
  • 5Cash flows from operating activities were robust, totaling $19.1 billion for the first nine months of 2021, an increase of $3.05 billion year-over-year.
  • 6The company declared a quarterly cash dividend of $1.45 per share, an increase from the previous rate, and repurchased shares totaling $3.95 billion in the first nine months of 2021.
  • 7UnitedHealth Group is pursuing the acquisition of Change Healthcare, with an anticipated capital requirement of approximately $9 billion, subject to regulatory approvals.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of individuals served across Medicare Advantage, Medicaid, and commercial offerings. Organic and acquisition growth within the Optum business, particularly in care delivery and managed services, also contributed significantly to the revenue increase.

COVID-19 had a mixed impact. While COVID-19 related care costs and rebate requirements negatively affected results, these were partially offset by the continued deferral of care, which reduced healthcare utilization. For Optum businesses, COVID-19 related care costs in OptumHealth were partially offset by temporary deferral of care. UnitedHealthcare's results were also impacted by COVID-19 related care and testing costs, but benefited from the deferral of care.

The company stated that its capital resources are sufficient to meet future short-term and long-term liquidity needs. As of September 30, 2021, UNH had substantial cash, cash equivalents, and investment balances. They maintain significant credit facilities and managed their debt levels well within covenant requirements.

UnitedHealth Group has entered into agreements to acquire Change Healthcare (NASDAQ: CHNG), a significant transaction requiring approximately $9 billion in capital, subject to regulatory approvals and closing conditions. This acquisition, alongside ongoing organic growth, underscores the company's strategy for expansion.