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7,300 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Tim Noel: Thanks, Josh, for the question. Yes, and I would underscore some of the pieces that Andrew mentioned. And also, yes, it is a very dynamic period right now in the Medicare marketplace. But our strategy and our vision here for the business really doesn't change a lot. I'll just underscore a couple of those that are key to this environment today. One is that, we've always had a long-term planning view and that's never more important than it is today. Right now, that includes a very rational response in any particular year to the revenue pressures that the program is facing. You saw that play out for us in ‘24; you'll see that continue to play out. As Andrew alluded to, that ensures that we don't have any deferred maintenance and pricing carryover into a subsequent year, given the environment that we're in. Along with that, we always strive to provide as much stability as possible to consumers in any one year. In this year, in 2025, that has meant preserving PCP co-pays of $0 for our consumers, and trying to do what we can to make sure that co-pays are near zero for the most commonly prescribed medications as well. And then also to preserve as much choice as possible that we have for consumers that's really important for Medicare beneficiary that we design products and plans that meet their needs and listening to what consumers want will always be a core element as well. Lastly, and this is really important is, this environment is continuing to create more value. And the headline there is around our partnership with our value-based care providers. That's the best opportunity for us to continue to create value in light of some of the pressures that the program is facing and we continue to see great opportunities there. And that's what we're leaning into right now. Finally, the newest technologies that are emerging around AI and ML are giving us some really nice opportunities to provide more efficiencies in our operation and be able to pass those efficiencies along to beneficiaries and then be another and |
7,301 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | more efficiencies in our operation and be able to pass those efficiencies along to beneficiaries and then be another and there'd be another considerable way that we offset some of the headwinds of the program. So yes, very dynamic environment, but really our strategy and some of the core principles and foundations of our Medicare Advantage programs don't change. |
7,302 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks Tim. And I just want to thank Tim and his team for if you just step back, Josh, and you're super well aware of this. And you just look at the amount of regulatory change, change in funding dynamics, IRA coming into the marketplace, insufficient growth coefficient in terms of future MA funding on top of V28 cuts. What Tim's team has done is basically try to neutralize a lot of that volatility and noise in terms of how it flows through to touch patients and members. It's really important that stability, never more important to have that -- than in this cycle we're in right now. Because otherwise you would see tremendous amount of, I think, disturbing volatility flow through into the market. And we're not going to do that. We are going to put our patients and our members first. We're going to strive to do everything we possibly can to give them a fantastic experience. By working with Optum, we believe that for many of those patients, we can introduce them to an unparalleled set of quality outcomes, both in terms of care and cost and experience. And that work has never been more valuable than when you see the kind of volatility that we've seen last year. And we're going to see again next year because of the things that have already been announced. And what you're seeing us plan for is how to work through that. We're not going to sacrifice long-term potential of all of what we've built in this short period of volatility. What we're going to do is work to insulate members, make sure that members have great experience. And today is the first sell in day and hopefully, lots of folks are going to be picking up the line to UHC today. Next question, please.
Operator: We'll go next to Justin Lake with Wolfe Research. |
7,303 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Justin Lake with Wolfe Research.
Justin Lake: Given all the volatility you've been -- we've seen in the sector, I was hoping you could share with us some incremental color on how your Medicaid business ex Duals and your Medicare Advantage business including Duals are performing in the third quarter and for the full year of 2024 relative to target margins. And maybe also give us some color on the expected pace of potential improvement that's implied within 2025 guidance, if there is any improvement expected?
Andrew Witty: Let me ask Brian to respond. |
7,304 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Let me ask Brian to respond.
Brian Thompson: Let me start with Duals, and I would say we remain very encouraged about the outlook for our duals business. Certainly, about the position of those products as we approach 2025, I think that will be a growth element for us. Inside 2024, obviously, we talked about it in our prepared remarks last quarter as well as this quarter. One of the three items contributing is the pressure we see from redeterminations. And that's obviously impacting our Medicaid book. I'd like to say that we probably weathered the storm on the volume impact of redeterminations, and that's now behind us. What we're really looking at now is how do these rates catch up to where our current cost trends are. And I think we've seen some strong momentum with our state partners, but it's not yet responsive to the trends that we're seeing real time. And we're hopeful that through our partnership and our advocacy that we'll close this gap on funding at a faster rate than maybe normal rating cycles would suggest. But the key items in the quarter, again, were just higher volumes of disenrollment. And if I was to point to one element beyond just the traditional acuity of those that left and those that stayed that we had planned for, I'd point to behavioral care. Many of our states have looked to us to expand access to behavioral care. And I think many of us that partner with our states have done so. That does have some cost implications. So we're really hopeful that these states will be more responsive than traditional rating cycles would suggest and that we'll see these tailwinds soon as we pace through this big year again of largely the volume being the driver of the implications in year and now hopeful that we'll see these rating cycles catch up to our cost trends that we're seeing emerge.
Andrew Witty : Great. Brian thanks so much. Next question please.
Operator: We'll go next to Scott Fidel with Stephens. |
7,305 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Great. Brian thanks so much. Next question please.
Operator: We'll go next to Scott Fidel with Stephens.
Scott Fidel : I was hoping just to toggle over to the commercial business and how some of those -- I guess, those three elements, obviously, excluding the Medicaid one, but the other two elements that you talked about that were -- costs were coming in higher than expected. Just if you could maybe sort of bifurcate that between commercial group and then commercial individual and I guess how you're seeing those flow through into both of those markets. And then just on the individual side, just how that informs your view on how you've priced your exchange products for 2025, and sort of comfort with the margin trajectory there?
Andrew Witty : Let me ask Brian to give you kind of an overarching view and then maybe pass to Dan Kueter to give you a little deeper on the commercial business.
Brian Thompson : Yes, Scott, thanks for the question, it provides me an opportunity to clarify. The three items that we mentioned at the outset and throughout really aren't a part of our commercial business. What we've talked about, obviously, redeterminations in the Medicaid space and the other pressure points around inpatient stays and specialty -- largely around Medicare Advantage. I feel really good about not only our performance, but our cost management inside our commercial business, and I'll hand it to Dan Keuter, our CEO of that business. |
7,306 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Daniel Kueter : I can offer that in the exchange business, as you asked about, our pricing is respectful of the brand and the other market dynamics in that space, which include our product offering, our geographic footprint and the competitive environment. For 2025, we have priced with a forward view of our cost in full respect for trend. As Brian and John have noted, those impacts that are driving some trend in the government programs are not applicable to the commercial business, whether that be on the individual side or the group side. So our outlook on trend for 2025 is consistent with our view for 2024, and the drivers in the commercial business remain the things that we have discussed for some time now: provider unit cost, pharmacy cost and enabling expanded access to behavioral health services. So those have been the driver in '24. We expect those to continue into '25. And we have priced both the individual business and the group business with full respect and awareness of those trend items. |
7,307 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Dan, thank you so much. And really, the two elements that Dan just raised there, the pharmacy unit cost and utilization, and of course, the hospital unit cost, are two kind of strategic areas that we really want to lean into. And we've been very outspoken for years about the need to bring down a list price of drugs. We continue to advocate very strongly for that. Until that happens, we continue to utilize all of the tools at our disposal through OptumRx to try and bring down those costs on behalf of our members and on behalf of the companies who we serve within the commercial books of business. We're also exploiting as much as we possibly can, opportunities to be leaders in how we think about biosimilar adoption and how we create wraparound programs on important areas like weight loss. All of which are designed to try and bring down essentially the ever kind of increase in inflationary pressure that we see from the drug bill, and that's an important one. The second one Dan referred to is hospital unit costs. And we've seen really some unusually aggressive and high unit cost asks, we are very much -- we fully recognize the critical role of the hospital systems and hospitals, obviously, within the care delivery environment. But we need to -- we want to continue to work to try and find new compact, a new way of working with hospitals. We want to see less abrasion in the marketplace. We believe that ought to come with more competitive rates in the marketplace. We see a critical role for hospitals as acuity needs rise and rise. But at the same time, we see great opportunity for us to partner with the right health systems to create much better value for money for the overall system. So the two areas we really want to be a willing partner to innovate. And whether that be with drug companies who are interested in new ways of working to bring down cost or whether that's with hospital systems who want to work with us to reimagine what the patient experience, the doctor experiences, and all part of bringing |
7,308 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | systems who want to work with us to reimagine what the patient experience, the doctor experiences, and all part of bringing down the unit cost, those are areas that are super important for the long run and it's going to be a space where you're going to see us continue to be very active in terms of putting forward ideas, trying -- piloting new approaches. The national gold card program I mentioned 30 minutes ago, is just one example, and we're going to continue to look for those sorts of opportunities. |
7,309 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Lance Wilkes with Bernstein.
Lance Wilkes : Could you talk a little bit about OptumHealth? And I had three points there. If you could talk a little bit about some of the drivers of margin improvement in the quarter. If you talk about the outlook for ‘25 for risk contracting. In particular, what things might be driving that as far as adoption in MA and if you're seeing adoption in other segments like employer. And then maybe a sort of related question, are you seeing any other responses in the employer segment to the high premium inflation environment that's out there, like PBC adoption, but also things like binder or whatever?
Andrew Witty : Let me ask John just to comment on margin. And I'd like to go to Dr. Desai, who looks after OptumHealth, on your second two points, if that's okay. |
7,310 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex : A few things benefiting Optum here is as it continues to progress. Let's start with -- now this is roughly a $100 billion a year business that we've been building over the past decade or so, advancing strongly along the way and we're able to make refinements in the business as we look ahead and such. So that is -- you should expect us to see us continue to refine the portfolio that we are in the types of businesses that we're in. What is OptumHealth is mostly a care delivery business at this point versus kind of what it was maybe even five years ago. And so you should continue to see us focus the portfolio strongly on that. So we'll focus the portfolio on those businesses that make a lot of sense for us, and we will not be in businesses that don't hang as tightly with the theme we have in value-based care and where we're heading for this business for the next decade. In addition to legacy elements in there, such as maybe contracts and such that needed refinements that have been in there for a while and so moving those along, also getting them into a better zone. So really, the company performing very strongly, fundamentally in here and the type of engagement they're having with the people that they serve at OptumHealth. And Dr. Desai and his team and how they've advanced that with the engagement of the most complex patients. Those are the fundamental drivers of how that business has performed. And then our job is to make sure that we refine the portfolio, refine the elements here as we look ahead for the next decade and build.
Andrew Witty : Great. Thanks, John. And Amar? |
7,311 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Great. Thanks, John. And Amar?
Amar Desai : So first of all, we feel very good about the overall performance of OptumHealth. We are continuing to execute against our three year plan that we put in place in 2023, focused on medical cost management and affordability initiatives, clinical engagement, our operating cost management activities and then accelerated diversified growth in some of our services businesses. On that point, in particular, with services, we're pleased with the growth in our OptumServe business, where we've had new product launches in the areas of medical disability exams that have resonated very well in the marketplace and have contributed to a leading position as a clinical provider for the largest government and federal agencies in the country. As it relates to your broader question around growth across payers, we have strong relationships with over 100 planned partners and are poised to execute on a broad, diverse growth agenda. In fact, in this dynamic rate environment and benefit environment we've discussed here, we're actually seeing increased outreach from payers who are looking for really an enduring partner who can operate in capitated arrangements. In particular, a number of productive discussions ongoing around funding and market level planning as we plan for AEP, but also in other lines of business. And foundational to all of these conversations is really first and foremost, the quality of our providers anchored in the community, particularly our ability to achieve clinical outcomes, including closing gaps in care for Stars programs and HEDIS measures, the strength of that network in the geographies that plan partners are looking to grow in, and then continued focus around our clinical engagement. In fact, year-to-date, we've engaged over 80% of our members. 90% year-to-date for our highest risk members. So when I take that together, great momentum and strength to not only grow but grow in a broad and diverse way across multiple lines of business. |
7,312 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Amar, thank you very much. And I'm going to ask Heather in a second just to give a little bit of perspective from Hersey the Head of Optum in terms of the value-based care ambition and where we're looking to take that particularly as it differentiates. But both Heather and I have recently been out with some of our key commercial clients, and it's been striking to me the rise in interest and -- it's a beginning, I think but the rise in interest for some commercial employers to start to explore moving to value based as an alternative. And I do think that we're going to see that start to move forward now. It's one of the reasons we've been investing heavily in some new groups, I'll call out particularly Kelsey-Seybold who joined Optum just a couple of years ago. They're really good at the leading edge of that kind of model. And I do think that we're going to see -- Lance, to your good question, I think we're going to see that start to evolve over the next few years. And we're certainly starting to see the beginnings of important employers begin to ask those questions. And there are obviously some who already do it, and I'd expect to see that trend accelerate as we go forward. But Heather, it'd be good just to share a little bit how you're viewing the overall value-based care kind of point of differentiation, maybe from a member perspective and the like. |
7,313 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Heather Cianfrocco : And just maybe, Lance, thanks for the opportunity. I think you're right, you're seeing -- in this dynamic environment and a complex funding environment, you're seeing the value proposition of the value-based care in the sense that Amar described it, not just for those plan sponsors that predominantly take risk for Medicare Advantage, but we're seeing it from employers as well direct to employer. And I think the principles of it, as Andrew said, is one, they're looking for alternatives that give clear predictability. They're looking for a better member holistic experience and that means integrating their wellness programs, it means better answers and closer proximity to the wraparound services they need, including behavioral health and at times home based services. And it means, again, more predictability and the ability to invest dollars in other areas of well-being and health for our employers. The other thing I'd point out is not only to Amar's point are we continuing to invest in value-based care. And with every month, we see more aligned physicians with better tools, with better platforms with increased signals and incentives to ensure that they're focused on the outcomes and the affordability of our members. And you're seeing that show through in OptumHealth's performance. But don't forget the other services, they -- across Optum, also help our payers and our employers, including our risk and quality services that we offer through OptumInsight. Those are the administrative and clinical services, they're more high-powered, they're more universal. We're using AI to bring down the cost of those and increase the universes. And in OptumRx, OptumRx PBM services, if the employer or the plan wants it, is a value-based accountable construct. They can do a pass-through where they manage the cost or they can do an accountable construct, when we talk about our clear guarantee programs. We take the risk for all of those services, including the specialty services. Now it's really important to note, I |
7,314 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | programs. We take the risk for all of those services, including the specialty services. Now it's really important to note, I think this is incredibly important that with guarantee or accountability, our clients don't lose transparency. OptumRx stands for transparency, but we're trying to make it simpler and we're trying to take accountability. So I would point to the value-based services across Optum and say, yes, they're resonating with payers. We're seeing that, and that's why we're so optimistic about our long-term value proposition. But every other service that Optum offers through Insight, through the Bank and throughout OptumRx contributes to that value-based mission and helps all of our clients, payers, state customers, federal customers, employers and should benefit our consumers with better outcomes and with a better experience. |
7,315 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Heather, thanks so much. And Lance, thanks again for the question.
Operator: We'll go next to [Joanna Gaik] with Bank of America.
Unidentified Analyst: So I just have a follow-up question on the OptumHealth discussion sites question was about margins. But I want to ask about revenues. In the quarter, the revenues actually did decline sequentially quarter-over-quarter from second quarter about 4%. So -- and I know there was a commentary around streamlining the portfolio and some contracts. So, is that sequential decline and a fraction that you -- there was something that actually did already take place in the third quarter in terms of exiting maybe some underperforming contracts or business lines? So can you comment on that? And I guess, were margins also benefiting from investment income and to what degree? And then I guess for the quarter, real question is about trying to ask again what you assume for margins in OptumHealth next year?
Andrew Witty : Let me -- I think actually the sequential is a pretty straightforward explanation, let me just ask John to give you a little detail on that.
John Rex : On, yes, so the refinements that I was discussing would be the primary impact in terms of the sequential and what you're seeing sequentially in terms of revenues. And as we continue to refine the portfolio, refine contracts, legacy contracts that might be out there and work ahead on that. That would be the really prime component that we'd see in there.
Operator: We'll go next to Sarah James with Cantor Fitzgerald.
Sarah James : I was hoping you could give us a little bit more color on OptumInsight. So excluding change, how are -- how is the sales pipeline and margins going versus your expectations on the non-change business? And then on change specifically, as we think about its transition into 2025, is that business an earnings drag? And how should we think about the revenue being a headwind or a tailwind compared to '24? |
7,316 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Sarah, thanks so much. I'm going to ask Roger Connor, who leads OptumInsight, to give you a little deeper on this. But I just want to thank and acknowledge that the tech team and the OptumInsight team more broadly for the extraordinary response to the change attack, and Joe shared you in a second, the great progress we've made in recovery in that business. Continues to be -- work to do, obviously, bringing back all the clients who we asked to go work with other folks during the attack. We did the right thing in terms of protecting the system and encouraging people to find alternatives. We're now bringing them back. We've made a huge step forward in that. That work will continue as we roll into New Year, as you heard in the introductory comments, but great progress on that. And the speed at which we will to rebuild a modern platform has been just extraordinary. And I think actually bodes very well for us in the future in terms of how we think about our speed of technical modernization as an organization. More broadly, I think it's also given us the stimulus to really, really reimagine what the future of OptumInsight is going to be, and I'll pass it now to Roger to give you a little more detail on just where we are on the recovery and, more importantly, on the non-change modernization aspects. |
7,317 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Roger Connor : Thanks, Andrew, and thanks very much for the question. I think hopefully, you're going to get a sense of the confidence we feel in OptumInsight going into 2025 as we move through the change event. Maybe if I just start there, first of all, with the cyber recovery and in terms of the progress that's been going well. From a Q3 perspective, you'll see that the business disruption reduced quarter-on-quarter. I suppose where we're focused through the first half of the year has really been on the restoration of the systems, and we've made very good progress. Not really, it's all about reconnecting our customers. And as John shared, we are seeing slightly higher business disruption trend going into the end of the year, and some of that will carry over. Maybe just a couple of reasons to a little bit deeper as to why that's happening. From a reconnection perspective, customers are coming back. We're actually making good progress there. What we're seeing is the volume that's coming back isn't coming back to the pre-attack levels. And customers are really looking for vendor redundancy, what they're out there looking for is in another one or two sources of their software systems, for example. Now we understand that. We think that's a good thing for the health system, but that is having an impact on us this year. But that also creates an opportunity for us. We've got an opportunity to go out and get new customers or sales and become an additional supplier for them. So again, that's a focus. That's going to take a little bit longer, a slightly more complex implementation time. So when you add those to factors together, that's why you see that carryover impact into 2025. I think it's important just to understand just the scope of OptumInsight overall. Because if you look at our core business outside of change, which is the vast majority of OptumInsight, that's where we're feeling very confident around the opportunities that we've got through the end of this year and going into next year. And you can see that |
7,318 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | confident around the opportunities that we've got through the end of this year and going into next year. And you can see that we're performing well. We've got momentum. You can see that in our operating earnings in terms of outperformance in terms of our growth year-to-year when you adjust for change. That confidence comes really in a couple of areas. One, the market needs us. The payer and provider markets are where we see real opportunity. There's significant cost pressure in that client base, and they really see our services and software as a bit of a sweet spot. That's where we can help and provide their solutions. And then where I'm actually most excited is what we're going to do in innovation and what we're doing in innovation to accelerate currently, because we're building off that new modernized tech environment that we've built this year at Insight. And we're using AI to not only transform the functionality of our current products, like payment integrity revenue cycle, but to create these differentiated products and creating this exciting portfolio of AI-driven innovations. Now the good news about Insight is that we can go and test those with our partners with UnitedHealthcare, we test them with OptumHealth. We conclude our big health system partnerships. That allows us to test these things quickly and bring them to market fast. And you're going to see us doing that more as we go into next year. So when I add that underlying market opportunity, I add that this AI-fueled acceleration of innovation, that's why I think that we've got -- we're really set up well going into 2025 and for our performance next year. |
7,319 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Great. Thanks, Roger.
Operator: We'll go next to Andrew Mok with Barclays.
Andrew Mok : SG&A has been a strong contributor to earnings this year. Just curious how we should think about the permanency of some of those cost changes as we look forward to 2025. Is there anything that you would call out as being more temporary in nature?
Andrew Witty : Listen, I think you should expect us to be very, very disciplined around cost management. And again, I want to go back to first principles. I'll take you back to the investor conference last year in New York. I stood on the stage and I said, look, essentially, what you're seeing from the CMSP28 rate change is a price cut. I mean that's what it is. And the price cut requires us to respond accordingly. And a key piece of that response, if you want to protect members, which we do is we have to take cost down inside the organization, and we have to try and eliminate waste in the MedEx environment outside of the company. So, we have been relentless around how can we find sustainable cost reductions for the organization, particularly in both businesses. You see this year, I'd say, Optum, in particular, has been doing a remarkable job of taking cost out. I think there's more to go, and we will be very relentless about that. And as an organization, we recognize the payer has the right to change the price they want we have to respond. Cost reduction is a key piece of it. And MedEx management is the other key piece, and those are going to be two really important features of the future for the organization in terms of how we robustly respond to all of this. So yes, you should expect more of that and it will be a key piece of the plan going forward. We just have time for one last question, if we could take the last one, please.
Operator: Yes. We'll take our last question from Erin Wright with Morgan Stanley. |
7,320 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: Yes. We'll take our last question from Erin Wright with Morgan Stanley.
Erin Wright : So you mentioned some of the internal investments just around AI and other initiatives into 2025. But what about broader capital deployment? I guess, how should we be thinking about the priorities heading into 2025 in the context of everything that's going on in and otherwise, but also just what's embedded in your expectation share buybacks or otherwise?
Andrew Witty : And I'll ask John just to comment in a second. But broadly speaking, our capital deployment is going to be very much led by our five growth pillars of focus for the organization. So as you think about that benefits business, obviously, UnitedHealthcare, value-based care, our technology-led opportunities, our pharmacy businesses and of course, financial services. Those are going to be the areas in which we think about capital deployment. Value-based care is really the organizing principle, which binds all of that together. So that's going to be a key kind of element to that also. And then I would add to that, something we talked about over the last two years extensively is consumerization. You should expect us to continue to challenge and push on how we can constantly modernize the consumer experience that we're able to offer. Technology as a facilitator of that, but also philosophy as a facilitator of that, right? The organization is changing. It's biased to being much more consumers in the way it thinks and operates. We want to continue to bring that to life. So those five growth pillars, the opportunities, the technology of the 2020s gives us, and then a shift in emphasis from the company towards a more consumerist experience, those are really the guide points. And then, John, maybe just more broadly summarize beyond that element, if you could for capital. |
7,321 | UNH | 3 | 2,024 | 2024-10-15 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex : So you should see -- expect our capital deployment agenda remain very much like it has the past many years, focused on expanding the capabilities of the company, orienting how we look at that orienting around our five growth pillars and where we need to be adding capabilities, clearly generating strong returns for shareholders as we deploy that capital. So first and foremost, that's always been the first priority, how can we build new capabilities for the company that will deliver strong returns for shareholders for the next decade and where should we be putting that capital. That will continue very much the same. You shouldn't see any shift on that. That's always first priority. And then we look at other elements there in terms of in share repurchase and dividend and those other elements where we can return capital to shareholders. So you should see that be very, very steady as you look to the decade ahead in terms of how we've always approached this business.
Andrew Witty: And thank you for the question, and thank you all for your questions this morning. As we look to conclude in this year and further preparing for 2025, we're excited about the future of UnitedHealth Group. We believe we have the focus, the discipline and the adaptability to continue to grow our 13% to 16% long-term target. And we remain, as always, committed to the people we serve. Despite the challenges that we see in the environment externally, we believe at UnitedHealth Group, we have the right mix of people, capabilities, passion and compassion to allow us to not just navigate 2025, but actually in doing so, set the foundations for continued differentiated performance for many years to come. We appreciate very much your attention this morning. Look forward to having the chance to see you in person in New York at our investor conference. Thank you.
Operator: This does conclude today's conference. We thank you for your participation. |
7,322 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: Good morning, and welcome to the UnitedHealth Group's Second Quarter 2024 Earnings Conference Call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here are. Some important introductory information. This call contains forward-looking statements under US federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amount is available on the financial and earnings reports section of the company's investor relations page at www.unitedhealthgroupcom. Information presented on this call is contained in the earnings release we issued this morning and in our form 8-K dated July 16, 2024, which may be accessed from the investor relations page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Andrew Witty. |
7,323 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thank you, Jennifer. Good morning, and thank you for joining us. The second quarter results we reported today reflect diversified and durable growth and a commitment to ensuring high quality care is available to every person we're privileged to serve. In the first half of the year, revenues grew by nearly $14 billion, with strong contributions from across the enterprise, led by double-digit growth at Optum. UnitedHealth Group entered the second half of the year with continuing and broad-based growth momentum. As a result, we are affirming our full year adjusted earnings outlook even as we absorb $0.60 to $0.70 per share in business disruption impacts related to the cyberattack. These results come from the sustained focus of the 400,000 people of UnitedHealth Group on adding value for patients, consumers and customers through the fundamental execution of our key priorities. We're also well positioned for growth in 2025. In the selling season to date, the most sophisticated thoughtful buyers of health benefits and services in the US, such as large employers, unions, states, seniors, all continue to choose the offerings of UnitedHealth Group, when they're looking for managed care, pharmacy services or a Medicare Advantage plan that provides the best value. This consistent growth reflects customers' recognition of the need for a company like ours. As you know, UnitedHealth Group strives to help reduce the fragmentation and lack of coordination that drives up costs and erodes care outcomes in the $5 trillion US healthcare marketplace. We aim to better coordinate and align incentives among caregivers, payers, and pharmacy, enabling us to focus on the whole patient throughout their health journey. We believe this increases value for customers and consumers, improves people's experience and health, reduces redundancies and waste, and ultimately leads to a more sustainable health system. For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage. A recent study by |
7,324 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | system. For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage. A recent study by Milliman found that the cost of taxpayers of Medicare Advantage is 4% less than traditional fee-for-service Medicare. At the same time, Medicare Advantage provides seniors well over $2,000 per year in additional value through lower out-of-pocket cost and important services like dental, vision and hearing, none of which fee-for-service Medicare covers. That means a lot to the majority of the people Medicare Advantage serves, who have limited economic resources and otherwise would lack access to such services. The home visits we offer seniors further illustrate the value of MA. Last year, our medical professionals made more than 2.5 million home visits. As a direct result, our clinicians identified 300,000 seniors with emergent health needs that may otherwise have gone undiagnosed. They connected more than 500,000 seniors to essential resources to help them with unaddressed needs such as food insecurity, medication affordability, transportation, and financial support. They also identified and helped close more than 3 million gaps in care that made a real difference in people's lives. Within 90 days of one of our home visits, 75% of patients received follow-up in a clinical setting. Additionally, Medicare Advantage patients with chronic conditions who receive these home visits end up with better managed and more stable health outcomes, as evidenced by spending measurably less time than fee-for-service patients in emergency room and other hospital settings. The bottom line, our home visit programs help patients live healthier lives and save taxpayers money. It is only Medicare Advantage that makes programs and results like this possible. Similarly, Optum Rx clients continue to appreciate the efforts we make to ensure delivery of the lowest cost drugs in the face of drug companies' sole ability to set prices. They also recognize the importance of the comprehensive pharmacy services we provide |
7,325 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | companies' sole ability to set prices. They also recognize the importance of the comprehensive pharmacy services we provide to people that's driving our momentum this year and bodes well for 2025. We also continue to bring practical innovation to people through new products and services, and by using new and emerging technologies to improve our own operating efficiency. For example, Surest continues to differentiate itself in the marketplace, which is why more and more customers are offering it to their employees, and why the offering continues to grow substantially. Additionally, investments in modernization of legacy technology and new emerging technologies are enabling our consumer-centric advancement of healthcare. For example, our growing AI portfolio made up of hundreds of practical use cases will generate billions of dollars of efficiencies over the next several years. These investments enable us to improve consumer experience, enhance provider find and price care capabilities to meet people's needs and improve clinical back-office execution. We expect technology innovation to become an increasingly core driver of our growth over the next two to five years. And now, I'll turn it over to our President and Chief Financial Officer, John Rex. |
7,326 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Thank you, Andrew. I'll start this morning by providing context on some of the unique items in the quarter. Then, I'll follow with perspectives on care activity and general business updates. The overarching theme I hope you leave with today is that UnitedHealth Group continues to deliver broadly diversified growth with expanding opportunities, work that positions us for continued strong performance in '25 and beyond. Now to update on Change Healthcare. Our focus has centered on the patients, care providers and customers who rely on us to keep the health system running. Payment and claims [slows] (ph) for most care providers are back to normal, but we know that is not the case for some, so we continue to work with those who are not there yet. UnitedHealth Group has provided more than $9 billion in loans and advance payments to help providers mitigate the impact of the attack, all at no cost to them. Cyber impacts in the quarter totaled $0.92 per share, and we now estimate the full year impact will be $1.90 to $2.05 per share. But let me break that down a couple of steps further for you. Of the total in the quarter, $0.64 per share were direct costs incurred in restoring the clearinghouse platform and other response efforts. These included higher medical expenses directly stemming from the temporary pause of some care management activities. For the full year, we now estimate these direct costs at $1.30 to $1.35 per share. The $0.40 to $0.45 per share increase in this estimate is primarily related to care provider financial support and costs for producing and mailing the consumer notifications that will begin later this month. As a reminder, these direct costs are included in net earnings but are excluded from adjusted earnings per share. The other component affecting our results relates to disruption of the ongoing Change Healthcare business. This largely encompasses the loss of revenues combined with the costs of keeping these capabilities fully ready to serve. Notably, these effects are not excluded |
7,327 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | of revenues combined with the costs of keeping these capabilities fully ready to serve. Notably, these effects are not excluded from adjusted earnings. In the second quarter, this impact was $0.28 per share. For the full year, we now estimate the business disruption impacts at $0.60 to $0.70 per share compared to the $0.30 to $0.40 we estimated last quarter. Most of the service functionality is now restored and revenues are rebuilding even as the pacing of this process varies. These important services are now more modern, secure and capable, and continuing to advance rapidly. Our ambition continues to be to return to baseline performance in '25 and to grow strongly from there. Turning to international. Following the sale last quarter of our much larger Brazil operations, we classified the remaining South American businesses as held for sale. This is a natural step following the Brazil sale. We highly value the relationships we have built with our dedicated colleagues over the last several years and wish them continued success. In a diverse enterprise with a strong growth record and capabilities such as ours, such portfolio evolutions enable us to keep our focus on the many compelling growth opportunities before us. The second quarter includes a total of $1.3 billion in South American impacts, the majority of which is non-cash and largely due to foreign currency translation losses accumulated over the years. About $220 million of this stems from a regulatory action in Chile, affecting all health plans. You'll see that as a component in the supplemental financial tables we provided this morning. The action relates to industry premium increases dating back to 2020, but as configured, will be reflected in consumer premium credits to be issued in future years. As a result, the entire $220 million was recorded as a reduction to premium revenue in the second quarter, increasing our reported medical care ratio by about 25 basis points. Turning to the second quarter medical care ratio, it was also impacted by about 40 |
7,328 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | medical care ratio by about 25 basis points. Turning to the second quarter medical care ratio, it was also impacted by about 40 basis points, or $290 million due to the suspension of some care management activities after the cyberattack. That makes for a total of about 65 basis points of non-repeating impacts, including South America. Beyond these effects, the care ratio in the quarter was also modestly affected by three other factors. One being member mix within Medicare Advantage and dual special needs plans, which this year has been shaped by the unusual competitive benefit configurations in the marketplace. A second being the timing mismatch between the current health status of remaining Medicaid members and the state rate updates, a timing mismatch we expect to realign in the months ahead. And third, the lingering upshift in provider coding intensity, which we believe was spurred by the temporary suspension of our care review activities and carried past. This impact is not reflected in our cyberattack direct response costs, and we have been addressing it. Nonetheless, we continue to expect our full year medical care ratio, excluding 30 basis points of cyber and South American effects to be within the range we offered in November, albeit at the upper end. For our 2025 Medicare Advantage planning process, we assumed care patterns and mix at the levels we are seeing today, in addition to fully incorporating the second of the three-year phased funding cuts, and we have been fully attuned to how the Inflation Reduction Act will affect Medicare Part D offerings in '25. Also, as noted, we expect the Medicaid timing mismatch to subside as rates are updated throughout the remainder of this year and into next, appropriately reflecting current member health status. Turning to the performance of our businesses. At UnitedHealthcare, revenues of $74 billion grew by $3.6 billion. UHC domestic commercial membership grew 2.3 million in the first half of this year as employers and consumers responded to our distinctive |
7,329 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | commercial membership grew 2.3 million in the first half of this year as employers and consumers responded to our distinctive offerings. And while the '25 selling season is ongoing, we are encouraged by the continued momentum we see. Our recently filed Medicare Advantage bid for '25, again took a balanced approach to provide as much stability for seniors as possible, while factoring in the realities of the funding cuts and current care patterns. You can expect us to continue to prioritize balanced and durable performance over transitory market share gains. In Medicaid, we expect membership levels to stabilize as we head into the second half of the year and our teams are executing well with both renewals and expansions. Optum Health revenues grew by 13% to $27 billion, and the operating margin expanded over last year. We are on track to approach 5 million patients in value-based care by the end of this year and are progressing strongly on our earlier and deeper engagement with patients, with a purposeful focus on our newer regions to more rapidly improve health outcomes and experiences. Optum Rx revenues grew 13% to over $32 billion, driven by strong customer response to the differentiated value, consumer experience and clinical expertise we offer. At Optum Insight, for the services beyond Change Healthcare, we see strong performance in line with our expectations. The revenue backlog increased to nearly $33 billion, growth of over $1 billion from a year ago, driven by business process and information technology services for health systems. A few additional items of note. As we highlighted in April, we established an additional $800 million in medical reserves in the first quarter to reflect the potential for the cyberattack to have affected claims receipt timing. With claims now flowing at more normalized levels, we continue to prudently analyze these trends. Similar to last quarter, the second quarter results do not reflect any favorable earnings impacting medical reserve development. Days [and] (ph) claims |
7,330 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | the second quarter results do not reflect any favorable earnings impacting medical reserve development. Days [and] (ph) claims payable at 45.2 compared to 47.1 in the first quarter. The change was due primarily to the return to more normal claims submission patterns from providers and to a lesser extent, some impact from reclassifying the remaining South American operations to held for sale. Cash flows from operations in the quarter were $6.7 billion, or 1.5 times net income, even with the accelerated funding for care providers. In June, our Board of Directors increased the dividend by 12%, marking the 15th consecutive year of double-digit dividend increases to shareholders. During the quarter, as I mentioned earlier, we prioritized devoting resources to support care providers in the wake of the cyberattack over some activities such as share repurchase. It was the right thing to do, devoting all our efforts to provide stability for the health system. Still, with our ongoing strong capital capacities and with support needs abating, we expect to achieve the full year repurchase objective we shared with you last November. In summary, it is the confidence we have in the performance of our diversified businesses that allows us to affirm full year adjusted EPS in the range of $27.50 to $28.00, the objective we established last year. Even as we have absorbed the unanticipated $0.60 to $0.70 in business disruption impacts. Within this, we expect a balanced pacing in the second half. Now, I'll turn it back to Andrew. |
7,331 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: John, thank you. As I said in November at our investor conference, we operate in an environment where change is constant. What you've come to see is that when changes happen, foreseen or unforeseen, we just deal with it. UnitedHealth Group is a nimble and adaptable enterprise, well suited to meet the challenges that come our way and the opportunities we pursue with the many and diverse capabilities available to us. In this first half, as we've done before, we navigated a complex external environment while managing through a significant business disruption. We continue to deliver on our growth objectives and are committed to delivering on our 13% to 16% long-term growth target. We'll now answer any questions you might have. Operator, please.
Operator: [Operator Instructions] We'll go first to A.J. Rice with UBS.
A.J. Rice: Hi, thanks for the question. Just to make sure, expanding on John's comments, if we're thinking about the -- your thinking on MLR overall for the rest of the year, it sounds like beyond Change, beyond Latin America, there's two items you're calling out. One is Medicaid timing mismatch, which sounds like you think it’s short term and then this upcoding, coding intensity comment. And I assume that's mainly in the insurance business, but maybe it's in Optum as well. Can you just give us a sense of how much those are impacting your thinking? And how much is second quarter versus the impact in the back half on those?
Andrew Witty: Yeah, A.J., thanks for the question. Let me ask John to get right to it. |
7,332 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Yeah, A.J., thanks for the question. Let me ask John to get right to it.
John Rex: Good morning, A.J. Yeah, and really kind of three items that we're talking to in addition to those two here, also the member mix component here when you bring it all together, those additional items that we're looking at in terms of -- versus where we were and how we're thinking about it. I would say they’re in kind of roughly equivalent -- in roughly equivalent zone in terms of their impact here. And then how they flow throughout the year -- the rest of year, really, you'll see some of those elements. So, as it relates to Medicaid impacts, pricing goes on over a period of, say, kind of 12 months or so. So there's pricing that occurs over the rest of this year into next year. So those elements in terms of catching up -- that mismatch catching up with the acuity that we have in the remaining population occurs over a period. Certainly, we are addressing the elements we talked about in terms of what we're seeing in the coding up shift, and we're well underway in addressing those elements, but we'll continue to address them throughout the course of the year. The member mix is kind of the member mix we have now at this point. And that really pertains to just the elements that I mentioned in my prepared comments about some of the benefit design impacts and how that impacted both our growth and also the type of membership that we were left with as we saw our full configuration. That really lasts with us throughout the year. So -- but that was an element we also incorporated into our view for 2025 as we approached our bids for '25. Thank you. |
7,333 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Well said, John. And maybe just to reiterate one thing John said and then maybe add a further point, A.J. Super important just to hear what you said in terms of that member mix, obviously, we deal with it during this year, but we obviously had the opportunity to incorporate into our '25 planning and bids. So, feel very good about that. And then the secondly, maybe just to reflect, step back just a little bit on as we think of MLR. Really, the biggest incoming dynamic on MLR at the beginning of this year was the funding reduction in MA, the V-28 significant reduction in funding. And you can see that we are fundamentally navigating that, I think, extremely well. And yes, there are a couple of areas of pressure at the margin. I think as you just heard from John, they're primarily boxed off in terms of they're going to work their way through the pricing cycle with Medicaid or in the case of concerns around coding activity, we're very focused on that, confident we'll be able to -- we are addressing that. So those things feel transitory. Most importantly, we feel good about the way our response to the V-28 funding cut is playing out for us in the overall business. And really that -- as we started the year, that was the much bigger thing to make sure we got right, and I'm feeling like we're well on our way through the first year of this three-year cycle, and we've talked to you repeatedly about how critical it is to make sure we navigate that over the long run, and we feel good about that. So, thanks, A.J. Next question?
Operator: Yes. We'll go next to Lisa Gill with JPMorgan.
Lisa Gill: Thanks very much and good morning. I want to focus for a minute on SG&A, which came in much better than expected. Can you maybe talk about the key components of where you're seeing cost savings, the durability? And, Andrew, you touched a little bit about AI efficiencies there. Are you starting to see that in this quarter? And how much opportunity is there from an SG&A perspective when we think about AI? |
7,334 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Lisa, thanks so much for the question. I'm going to ask John to comment a little bit. Let me make a couple of kind of upfront comments and then maybe a couple of examples more specifically to help you a little bit on this. So, to get your last point, we are running now hundreds of AI use case deployments. I'd say the first wave of those are essentially allowing us to do things much more quickly, much more reliably, much more efficiently than humans can do them. So an ability to navigate complexity to find answers within complex datasets. And super important, and I'll give you a couple of examples of how that begins to help us as we go on. I think we are now -- you will also start to see as we roll through the end of this year and next year, those same kind of tools begin to be deployed in fundamental reimagination of business process. So one is essentially allowing an existing process to run more efficiently. The second is, can we actually take steps out of a process and really start to change things. I'd call out payment integrity as a front-runner in that particular regard. And you'll start to see a lot of movement there over the next year or so, Lisa. And it's going to be, I think, OptumInsight '25, '26, '27 in terms of deployment of technology to change many of the processes that we've been used to for decades is coming, and that's going to be a very exciting phase. If you look in the short run, I'll give you a couple of examples. And this plays a little bit around technology. I certainly wouldn't say these are all Generative AI examples, but they're certainly digitization examples. They are certainly technology-enabled examples. So for example, we brought on this year at OptumRx a record number of clients. You've seen the growth. You can imagine the number of folks who've been signed up into Rx platforms. We actually spent 9% less this year in the onboarding of that record volume than we did the prior year, 9%, that’s entirely due to digitization, technology efficiency deployed through the |
7,335 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | record volume than we did the prior year, 9%, that’s entirely due to digitization, technology efficiency deployed through the organization. Let me take you into another part of the organization, OptumHealth. We've more or less increased our number of risk -- fully risk delegated lives within OptumHealth by about 40% over the last two years. That's -- by the way, that's in excess of 1 million -- almost 1.5 million more lives over that period with zero increase in personnel headcount in the risk-based businesses. So, zero increase in headcount in a business which has increased its served members by close to 40%. So those are just a couple of examples. You're seeing that show up in those two examples, Optum. That's why you're starting to see that leverage flow through the Optum business line and it’s something we obviously expect to continue to sustain over many, many quarters and years. And, John, I'd love you to go a little deeper. |
7,336 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Yeah. Good morning, Lisa. As you can -- I guess I'd start by -- it is early in that journey in terms of the potential and opportunity for what we can do. And yes, it was a very strong quarter in terms of cost management. But let me just step back a moment here. As you can imagine, given how some of these businesses were built and the fragmentation of the system, there are duplicative functions and uneven consumer experiences throughout that we're addressing. And as our businesses begin to scale, our ability to produce efficiency accelerates while, at same time, we can improve those customer experiences and expand the best practice across the broader base. The comments that Andrew was offering in his answer to your question, it's just really a natural outgrowth as these businesses begin to move beyond what we have viewed the earliest phases to a more adolescent phase. That's what we're seeing. Very strong this quarter. Over the longer term, we can expect advancement. I wouldn't expect it to remain at this level consistently as we look ahead over the next few quarters, though. It was a super strong quarter. But we are going to look to invest in many of these items that Andrew just articulated here, getting to a more modern streamlined experiences as these businesses evolve further. So I wouldn't expect it to persist right at this level as we make those investments, and we're anxious and ambitious to make those investments. |
7,337 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Great. So, Lisa, thanks for raising it. You can tell it's a big focus for us. We laid out when V-28 first was announced, that one of the three ways that we would respond to this is we would double down on our own cost management efficiency and productivity, you're absolutely seeing that. And that coincides with an extraordinarily and exciting moment around technological innovation, whether that's Generative AI, digitization, all wrapped together in our march toward a greater consumer focus within the organization. All of that really hangs together is very much the core focus of how we think about things going forward. Thanks, Lisa. Next question.
Operator: We'll go next to Josh Raskin with Nephron Research.
Josh Raskin: Hi, thanks. Good morning. Looking at your bids that you submitted for MA for 2025, I'd be curious if you could tell us if you were bidding to improve MA margins in 2025, or if you're still within that target range in light of the G&A savings? And then more importantly, maybe just some early thoughts on what sort of growth assumptions you have included in those bids, both your assumption for the market as well as any potential market share gains?
Andrew Witty: Hey, Josh, thanks so much. I'm going to ask Tim Noel to address the first part of your question. On the second part, you're not going to be surprised. I'm going to defer from making any predictions about next year. It's still a little early. We'd like to see where everybody else plays out in this cycle. I think we [also are] (ph) in the 2024 cycle. Ultimately, the way growth plays out in the marketplace depends on how everybody bids, not just on how you bid. And it only takes one bid to be kind of out of expectation to completely distort your view of how things could play out. So, just going to defer a little bit on that one, but on the first point, Tim, I'd love you to make a few comments. |
7,338 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Tim Noel: Thanks, Josh, for the question. So, as we think about margins in the MA business and as it relates to our bid, I think we've talked about the consistent approach to how we plan margins. And we maintain -- continue to maintain that and we're operating comfortably within that margin range as we have in the past and as we're planning in 2025. And then when I think about our pricing approach for 2025, as Andrew mentioned, too early to get into a lot of specifics as CMS is reviewing those bids right now. But we're in a posture and how we've priced those products as we'll be comfortable with whatever growth is the outcome of the products that we bring to marketplace in 2025.
Andrew Witty: Great. Thanks so much, Tim. And, Josh, appreciate the question. Next question, please.
Operator: We'll go next to Stephen Baxter with Wells Fargo.
Stephen Baxter: Yes. Hi. Thanks. Can you speak in a little greater detail about your expectation that the Medicaid pressure starts to subside in the second half of the year? I guess specifically, can you maybe speak to what you actually know about rates today, either draft or finalized, versus perhaps speaking to a general reliance on actuarially sound rates playing out over a reasonable period of time? Just trying to understand the level of visibility that you have a bit better. Thank you.
Andrew Witty: Okay. Hey, Stephen, thanks for the question. I'm going to ask Krista Nelson, who leads our Medicaid business to respond to that. Kristen? |
7,339 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Krista Nelson: Yeah, thanks so much for the question. So as it relates to visibility, we've got visibility into the majority of our rates for ‘24. And while there's just a slight gap in the second quarter, we really like how our 7/1 rates are shaping up and continue to work with state partners to influence key assumptions before those rates become final in the future. And while we might see a little bit of dislocation the rest of the year, states have really committed to accurately reflecting the change in acuity from redeterminations into current and future adjustments and really expect this to even out as we pace through the remainder of ‘24 and early ‘25. Thanks for the question.
Andrew Witty: Krista, thanks so much. So I mean, listen, Stephen, I think you heard there why we're confident that this is really a kind of time-fenced issue and in the grand scheme of things, I would characterize this as a margin. It's a part of what you've seen in this small deviation in Q2, but we don't really see it as a sustainably structural issue and you heard exactly why just there. So, thanks, Krista. And, Stephen, thanks for your question. Next question, please.
Operator: We'll go next to Justin Lake with Wolfe Research. |
7,340 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Justin Lake with Wolfe Research.
Justin Lake: Thanks, good morning. Just a quick clarification and then a question about second half MLR. So first, the clarification. On the MLR, it sounded like, John, you're guiding to a core MLR at the high end of the range or 84.5%, and then I would add 30 basis points of the one-timers for the full year that you've seen in the first half, that would leave GAAP MLR at 84.8%. Is this correct and to be clear, is there any expectation for further one-timers in the second half of the year? Or should the third and fourth quarter kind of be clean? And then my question is just around, core MLR in the first quarter, ex the one-timers was 84.2%. Sounds like it'll be 84.8% in the second half. Maybe you could help us think about 3Q versus 4Q just to make sure our expectations are set correctly, given how much focus there is here. Thanks.
John Rex: Good morning, Justin. I’d say first, yes, the way you described our assumptions around core full year MLR are consistent with our expectations. So how you describe that is quite consistent. As it relates to just looking at towards the 3Q and such, I'd expect that to be in the neighborhood of 84%, very likely a few tens of basis points higher than that. So, it's kind of a little bit above that in that zone. As it relates to kind of other elements that we've pulled out here, no, they shouldn't be material. Those cyber effects should continue to abate. As we mentioned, we're not adjusting for the elements we talked about the provider and coding intensity, so that kind of pulls through a little bit. But there shouldn't be any material other impacts that we're thinking about. Thank you.
Andrew Witty: Thanks, John. Thanks, Justin. Next question, please.
Operator: We'll go next to Scott Fidel with Stephens. |
7,341 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks, John. Thanks, Justin. Next question, please.
Operator: We'll go next to Scott Fidel with Stephens.
Scott Fidel: Hi, thanks. Good morning. Actually, I was hoping we could maybe do a similar exercise as Justin just asked about with MLR for OptumHealth margins. And maybe first, if you can talk about how the OH margins came in at 2Q relative to your expectations. And then how you're thinking about OH margins progressing in 3Q and 4Q? And then how comfortable you are with getting into that -- the full year target range that you had provided. And, John, I thought it might be helpful to -- as we think about the sort of pacing in the back half of the year, in particular, how you're thinking about an exit rate for OptumHealth margins as we're exiting 2024 would be helpful? Thanks.
Andrew Witty: Scott, thanks so much for your question. I'm going to ask Dr. Amar Desai, who leads OptumHealth to give you a few comments there. I mean, let me just preface that by saying, look, we feel good -- very good about the continued progression and in particular, the way in which OptumHealth is -- has adjusted to deal with the new funding environment. I'm also very, very encouraged by the degree of external payer engagement with our OptumHealth platform as they deal with the environment themselves and look at Optum as a part of that solution. And I think the performance of the business you see is, it continues to improve over last year. You continue to see decent progression. And let me ask Amar to give you a little bit of a sense of how he sees the second half of the year playing out. |
7,342 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Amar Desai: Hi, Scott. Thanks for the question. So as Andrew said, we're in the middle of the first year of a large rate reduction over the next three years, effectively being a price cut. And as we think about the initiatives, we're pleased with the early success, mitigating the impact of that changing rate environment. In '23, we developed a three-year plan to manage through V-28. Medical cost management and affordability initiatives was at the center of it. Proactive clinical engagement that impacts member experience and total cost of care is obviously core to that, including better prevention and chronic disease management and then disciplined operating cost management, more efficient ways to work, improvements in productivity, driving consistency in our workflows and systems, which Andrew and John alluded to. We're executing very well on this plan, seeing solid progress across each of these areas. As an example, at this time last year, we had engaged 62% of all members. Year-to-date, we've engaged three-fourth of all members and above that for our highest risk membership. We're also focused on coordination of care, particularly at transition points in care, where we've increased post-discharge visits for patients who have been hospitalized that has, in fact, reduced readmission rates by 10% in our most mature markets. So, as we pace through the balance of the year, we expect to continue to build on this momentum across engagement, affordability and operating cost management and are confident in the 7.7% to 8% target for the year.
Andrew Witty: Great. Amar, thanks so much. And, Scott, thanks again for the question. Next question please.
Operator: We'll go next to Kevin Fischbeck with Bank of America. |
7,343 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Kevin Fischbeck with Bank of America.
Kevin Fischbeck: Great, thanks. Just wanted to clarify, I guess, something and ask another question. It wasn't clear to me what you were saying about no favorable reserve development. Does that mean the $800 million that you mentioned previously is still somehow in the numbers? Or is that kind of worked its way through at the end of Q2? And then I guess just trying to understand better where the outperformance is because obviously, you guys have assumed $0.60 to $0.70 of Change costs in your guidance but reaffirm the numbers and it doesn't sound like Medicare is the answer, doesn't sound like Medicaid is the answer, Change isn't the answer. So where has the outperformance come in that’s allowed you to maintain guidance? Thanks. |
7,344 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Yeah. Good morning, Kevin. This is John. So yeah, exactly what we said there was nothing material there going on in development. No favorable P&L impacting development in the quarter, very similar to last quarter in terms of there was just no impact being there. And in terms of just a comment -- or questions regarding outperformance, well, maybe some across a number of the businesses in terms of where we're seeing, we're seeing very strong growth, certainly in our commercial health benefits business, we're seeing strong growth. We're seeing margin progression in OptumHealth. So we're seeing advancement. The -- really, the strong approach that the team at M&R took and tell how they looked at '24 in terms of overcoming the headwinds at V-28 and the very disciplined approach they took to how they stepped out into the marketplace with the products that they took. Even with some of the elements that we talked about that we’re overcoming there, but certainly, all those creating a good impact from us. Clearly, just across the company, the strong operating efficiencies that the company is driving, strong and sustained. And as I said, look, we will continue to make investments, but really a significant progress on that and still very early stage. So as Andrew commented in terms of the potential we have as we look over the next three years and this impact, and we're just getting some of these businesses to a maturity level where we think we can really harness that. Thank you. |
7,345 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Yeah. Thanks, John. And let me just also reiterate that point. I mean part of what you're seeing here, Kevin, is obviously, the big change this year was the V-28 funding cut price reduction, which obviously focuses primarily on our Medicare Advantage business that Tim runs and the OptumHealth business that Amar runs, both of whom are responding super well. But let's be clear, while those pricing cuts are focused on two businesses, team UHG is responding, right? The entire corporation is engaged in how it manages itself better, reduces cost across the company, leverages technology, accelerates our consumer agenda, all designed to play our part across the board in how we offset the pressure that's been inflicted on those two important businesses. Why we're confident we can navigate this? I think you're seeing that in the performance of the business, and we're going to continue -- it’s why I said what I said earlier today. We're going to continue to focus on every aspect of our business to make sure that the model we've laid out and we believe is the right one for delivering best value care for patients is the one that prospers and we're super confident in that. Next question?
Operator: We'll go next to Andrew Mok with Barclays.
Andrew Mok: Hi, good morning. The OptumInsight backlog was down about $200 million sequentially. Can you give us color on the drivers of that and the nature of conversations you're having with providers following the cyberattack? Do you expect further declines in the backlog this year? Thanks.
Andrew Witty: Andrew, thanks so much for that. Let me ask Roger Connor to address that. It's pretty straightforward. But let me ask Roger to answer that and maybe give you a little bit more flavor on what he's seeing. |
7,346 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Roger Connor: Yeah, Andrew, thanks very much for the question. Just in terms of backlog, obviously, an important measure and there has been some impact from the Change events within that. What it doesn't include, obviously, is what we're doing in terms of bringing in new clients and what we're doing in our whole innovation space. But fundamentally, we are very confident in terms of the performance going into next year with the cyber event certainly from an impact on the overall health system is not absolutely minimal. When you look at our overall focus, it's now on driving that business recovery. And that's all about bringing volume back into the system. And we're seeing that actually really ramping up and seeing momentum acceleration. We're not only trying to bring volume back into our current customers. We're also going to bring new clients in, and that's exciting because this event has really transformed the marketplace. They're looking for, again, access to innovation, access to security in the system and that’s what we've brought back. We've brought back a very secure system, and that is resonating or seeing that momentum. You add that to the underlying strength of the OptumInsight business. Again, Change is only 15% of our overall business performance this year, was planned. That's why we're confident in terms of getting back to our baseline performance in 2025.
Andrew Witty: Great. Thanks so much, Roger. Thanks, Andrew. Next question.
Operator: We'll go next to Nathan Rich with Goldman Sachs. |
7,347 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Nathan Rich with Goldman Sachs.
Nathan Rich: Hi, good morning. Thanks for the question. I wanted to go back to the provider coding activity that you called out and asked maybe what you saw kind of change in the quarter and what actions you're taking to address this change? And is this pressure something that accounted for in bids for next year? And then if I could just ask a very quick clarification on the Change impact on EPS. You talked about the return to baseline performance in 2025. Does that mean you would expect to recover the $0.60 to $0.70 [that is in] (ph) earnings this year? Thank you.
Andrew Witty: Okay. Thanks so much for the question, Nathan. Brian, if you'd like to go first?
Brian Thompson: Sure. I'll answer that first part on the upshift that we saw in provider level of care coding patterns. We actually believe that was largely induced by our level of care waivers that we did during the cyber disruption. The reason we believe that is we really saw a higher level of mix to inpatient versus observation after we went back to turning on our utilization management protocols. Pretty distinct on April 15th and thereafter. So that's why we see that. Certainly aware of that activity as we plan for 2025 in our bid. So, really no concerns with respect to that. I feel like it's an anomaly tied to what we saw during our waiver. And we have reinforced our utilization management protocols and believe that these impacts will dampen as we pace through the remainder of the year. |
7,348 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Yeah. And regarding Change, yes, as we mentioned in our comments and Roger mentioned, our ambition is to get back to baseline expectations performance for that business in 2025. So those baseline expectations being what we would have expected prior to any of this happening. And clearly this quarter, we have increased the impact of the business disruption here. So as we bring those back, there's the pacing of those revenues coming back, taking sometimes a little bit more time to bring in, but that is our ambition, actually, as we look ahead.
Andrew Witty: Thanks, John, Brian. I mean, again, just on this business interruption piece, I mean, I think in all honesty, we were a little optimistic in hindsight at the pace at which we thought people would come back in terms of putting their flow through the system once it was reconnected. I think as we've looked at the last several weeks, that momentum and pace, and particularly as we look at new clients come in and as well as returning clients feel good about where we are now. So I think probably a little overoptimistic three months ago. I think now, I feel like we have this now and we're in good position and the rest of the year we've got a clear path how this plays out. And I think the platform that we've rebuilt is going to serve people extremely well. Next question.
Operator: We'll go next to Erin Wright with Morgan Stanley.
Erin Wright: Great, thanks. So on the earlier topic of potential offsets, I wanted to ask on Optum Rx and with the recent level of industry attention kind of on the PBM business as well as kind of specialty pharmacy, how should we think about how those drivers are playing out relative to your expectations, whether it's biosimilars or GLP-1s in terms of that therapeutic category, how should we think about those near-term drivers across Optum Rx? Thanks.
Andrew Witty: Erin, thanks so much for the question. Let me ask Heather, who runs Optum for us, to make a couple of comments on that, if you don't mind, Heather. |
7,349 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Heather Cianfrocco: Sure. Just basically, I think you can see in the quarter, just strong performance, maybe a couple of things I would just highlight for that. We've talked for a few years about the investments we've been making in Optum Rx on both the PBM side, but also on the pharmacy side. PBM side, you've seen the growth there in client and just in volume, sort of same with respect to volume within our existing clients as well. We take that as a sign of strong retention of existing clients and continuing to perform with them. I think the thing I'd highlight on the PBM side is, I've said this before, the modular effect of the PBM business. We serve at the privilege of our clients, so what they need, we serve, And that is we administer their benefit. And we offer the programs, the services to drive affordability of medications for them in the best interest of their members. And we've brought a lot of products and services in the last year. Two or three new products this market that are leading differentiating in the marketplace that we are seeing our health plans and our employers take advantage of this year that are really market differentiating and we are seeing that drive not just growth with health plans, but growth in products and services. So I think you're seeing that show up. The other thing you're seeing is the cost efficiency show up in the business. One of the -- Andrew brought up an example. And you're seeing some of the timing of supply chain efficiency. On the services side of the business, you mentioned specialty, I call out the diversification of the pharmacies in general. Remember, we've got the integrated behavioral health business which continues to grow and expand. It's a very differentiated business in that it's co-located and it's specifically directed at those behavioral health members to ensure access and affordability and holistic care to individuals with mental health conditions. And then our frontier and our infusion services that really drive those specialty medications in-home, |
7,350 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | health conditions. And then our frontier and our infusion services that really drive those specialty medications in-home, we're seeing continued need for that from our PBM clients, but also non-PBM clients. And so that's where we're really seeing that diversified growth. So you're just seeing that show up in continued, consistent performance in that business through the quarter. |
7,351 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Heather, thank you. Erin, thanks so much for the question. We have time for one final question, please.
Operator: We'll go next to Lance Wilkes with Bernstein.
Lance Wilkes: Great, thanks. For OptumHealth, could you talk a little bit about what pricing has been like there? And, in Investor Day, it seemed like you may have seen some improved pricing as far as global cap rates, and likewise given higher global cap rates out of the MA business. Was wondering if ‘25, we should be expecting continued improvement in that, or whether there needs to be a retrenchment or retracing of that kind of makeup for what was given? And also, are you starting to exclude things from global cap as you look at 2025? Thanks.
Andrew Witty: Hey, Lance. Thanks for the question. And love the cheeky attempt at the end of the call to get us to predict, give you some numbers for ‘25. We're going to defer from that, but well done on the last-ditch effort. I'm going to ask Amar to give you a little bit more of a kind of general sense of how we're seeing that. And please go ahead, Amar. |
7,352 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Amar Desai: Thanks for the question, Lance. Look, we continue to have very strong relationships across our over 100 plan partners. And in fact, in a pretty dynamic rate and benefit environment, we've seen increased outreach from payers looking for an enduring partner that's very adept at operating within fully capitated value-based arrangements. In particular, the discussions have been productive around benefit design, funding, market level planning and we're confident in the position as we go into 2025. We're down the path in adding plan partners as well as adding geographies for 2025. Foundational within that to those relationships and as we think about those arrangements is quality, quality of care of our providers that are anchored in the community, our strong ability to drive clinical outcomes, improvements and achievement in star measures, and of course strong documentation and diagnosis. We also are seeing that the strength of our network that's aligned in geographies is an important focus area for plan partners, and of course continued focus on clinical engagement which I mentioned previously. So when you take that together, great momentum across those areas gives us confidence as we drive value for our plan partners and as we pace through the next two years of the risk model changes and grow. |
7,353 | UNH | 2 | 2,024 | 2024-07-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Amar, thank you very much. And as I think you could probably sense from those couple of answers that Amar has given you over the course of the call, Amar leads a very, very special team of people running a very, very special business in terms of what it’s able to do on behalf of patients and the way it's able to provide great work experience for the healthcare professionals and colleagues who work in that business. I'm very pleased with how the continuation of that business progresses. We're coming toward the end of the call. I'd like to thank you all for your questions this morning. As you've heard, our focus on fundamental execution, our restless spirit, and our ability to adapt to changing environments gives us great confidence as we look ahead and as a testament to the hard work and discipline of the people of UnitedHealth Group who work every day to serve patients, consumers, and care providers, customers efficiently and effectively. We appreciate your time this morning. Thank you.
Operator: This does conclude today's conference. We thank you for your participation. |
7,354 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: Good morning and welcome to the UnitedHealth Group First Quarter 2024 Earnings Conference Call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here is some important introductory information. This call contains forward-looking statements under US Federal Securities Laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial and Earnings Reports section of the company's Investor Relations page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated April 16, 2024, which may be accessed from the Investor Relations page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Andrew Witty. |
7,355 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Good morning, and thank you for joining us today. We have a lot to cover. First, we'll discuss the status and impact of the Change Healthcare cyberattack, then we'll turn to the performance of our businesses, which continue to grow and perform well. It's important to underscore at the outset that even as we have devoted significant attention to addressing the Change Healthcare attack, the vast majority of the 400,000 people of this enterprise have remained as usual, intensely focused on delivering for all those we serve. That dedication is reflected in our overall performance this quarter. Directly as a result of their hard and -- hard work and the broad performance of our diversified businesses, we're able to reconfirm our full year adjusted earnings outlook, even as we absorb $0.30 to $0.40 per share in business disruption impacts related to Change Healthcare. Now turning to Change Healthcare, this was an unprecedented attack by a malicious actor on the US health system. We promptly disconnected the affected services and turned our focus to two main areas, restoration and support. The attack disrupted the ability of care providers to file claims and be paid for their work, we moved quickly to fill this gap. Fortunately, we were able to bring to bear the substantial resources of UnitedHealth Group to drive the recovery and begin to mitigate the impact. Resources, which are standalone to Change Healthcare, would not have had access to on its own. These are the resources and the philosophy that underpinned our remediation of healthcare.gov back in 2013, and our distribution of CMS COVID emergency relief funds to care providers in 2020. Here, we assisted care providers in financial need, providing over $6 billion in funding, all at no cost to them. We rapidly deployed resources to develop alternative solutions and move promptly to restore claims and payment services. We've made substantial progress and we will not rest until care providers' connectivity needs are met. And to help care providers |
7,356 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | made substantial progress and we will not rest until care providers' connectivity needs are met. And to help care providers mitigate workflow disruptions and help ensure the uninterrupted delivery of care, for a period of time, we suspended some care management activities. I'm immensely grateful for our colleagues who continue to work tirelessly day and night to restore services, free up funds for providers, and protect the broader health system. Let me touch on two more items we know are of interest to you. First is care activity. The central point is that overall care patterns are consistent with what we anticipated last year heading into 2024 and within the outlook we shared with you in November. The second item is the essential value of Medicare Advantage to seniors. Here are what we see, some of the core facts regarding Medicare Advantage. It drives better health outcomes, provides a higher-value, significantly more comprehensive benefit for people, all at a lower cost to beneficiaries and taxpayers, and is more popular with and valuable to seniors than traditional Medicare. Medicare Advantage consumers spend on average 45% less on premiums and out-of-pocket costs than those in traditional Medicare. That translates into nearly $2,400 in savings annually and several times more for the country's most underserved and medically challenged populations. That's one of the many reasons why more than half of seniors choose Medicare Advantage today versus 30% 10 years ago and why we believe these offerings will continue to grow strongly for years to come. 2025 is the second year of the significant three-year phase funding reductions to Medicare Advantage introduced by CMS last year. Here, in early 2024, we're at the beginning of our thoughtful responsible three-year plan we developed last year to adapt to those changes. Our strategy continues to focus on providing as much stability as possible in the reduced funding environment. Improving outcomes and experiences for the consumers we're privileged to serve, and |
7,357 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | in the reduced funding environment. Improving outcomes and experiences for the consumers we're privileged to serve, and delivering the performance you expect from us. We believe our long-term perspective and the deliberate multi-year approach we began last year is serving us well, putting us into a position of sustainable competitive strength. Among a handful of notable business developments to share, UnitedHealthcare was honored to secure major Medicaid wins in Virginia, Texas and Michigan. While we're disappointed in the outcome in Florida, we'll be seeking to better understand the process and considerations there. There is a substantial pipeline of Medicaid RFPs and we're confident that our offerings will resonate in other states as well. UnitedHealthcare's commercial benefits continued their momentum from last year, growing to serve two million more people in the first quarter, the largest increase in years. This growth was across UHC's commercial customer segments from individuals up through the largest of employers. This is further evidence of our innovative and consumer-centric products have established the footing for sustained growth. We also see continued momentum at Optum Rx, coming off last year's record-selling season with a recent win in Hawaii and the renewal of our contract with the Department of Veteran Affairs. We're grateful for the opportunity to support them. And Optum Health is tracking well to achieve its objective of growing to serve another 750,000 patients in value-based arrangements this year in partnership with many payers. Before I turn it over to John Rex, our President and Chief Financial Officer, I want to acknowledge Dirk McMahon, recently retired after more than 20 years of service, I'd like to thank him for his leadership and partnership. Dirk has left an indelible mark on this company through the example he set and the many of our leaders he has mentored. John? |
7,358 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Thank you, Andrew. This morning I'll first provide color on some of the unique items in the quarter directly related to the Change Healthcare cyberattack, followed by care activity trends, business updates, and finally thoughts on the remainder of '24. But first, let me start at the most fundamental level. The UnitedHealth Group businesses continued to grow and perform well during the quarter, and we are encouraged by the momentum and the many opportunities to serve we're seeing across the enterprise. On the Change Healthcare cyberattack, as Andrew noted, our guiding focus throughout has been to make sure patient care is delivered and care providers' access to funding is secured as we work to bring back services fully. The cyber impacts in the quarter totaled about $870 million or $0.74 per share. At this distance, we estimate the full year impact will be $1.15 per share to $1.35 per share. Let me break that down into its key components. Of the $870 million, about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses directly relating to the temporary suspension of some care management activities. For the full year, we estimate these direct costs at $1 billion to $1.15 billion or $0.85 per share to $0.95 per share. It's important to note these direct costs are included in net earnings, but are excluded from adjusted earnings per share. The other component affecting our results relates to the disruption of ongoing Change Healthcare business. This is driven by the loss of revenues associated with the affected services, all while incurring the support and costs to keep these capabilities fully ready to return to service. Notably, these effects are not excluded from adjusted earnings. In the first quarter, this impact was about $280 million or $0.25 per share. At this distance, we currently estimate the business disruption at $350 million to $450 million or $0.30 per share to $0.40 per share for the year. This, of course, will |
7,359 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | business disruption at $350 million to $450 million or $0.30 per share to $0.40 per share for the year. This, of course, will depend on the ultimate timing of service and transaction volume restoration. These elements are broken out for you in the supplemental tables provided with our press release this morning. Of course, we will provide regular updates on our progress and outlook throughout the course of the year. While much of Change Healthcare's functionality and services have been restored, we are working hard to restore more and the objective we all share is for an even stronger Change Healthcare to be fully returned to expected performance levels next year. I'll come back to some of these elements in more detail in just a moment. Turning to underlying care patterns. The headline is that these continue within our expectations. Outpatient care activity among seniors remains consistent with the elevated levels we began seeing in the first half of '23 and for which we planned. So we continue to be comfortable with the outlook we established last June when we filed our 2024 Medicare Advantage benefit offerings. The winter seasonal activity we discussed with you in January, particularly related to strong vaccine uptake, higher respiratory illness incidents, and related physician office visits has subsided. Overall inpatient care activity also remains within our expectations. The first quarter medical care ratio at 84.3% included roughly 40 basis points or about $340 million related to the temporary suspension of some care management activities. These have been recently reinstated. The majority of the remaining $325 million of full year medical expense impact included in our outlook will land in the second quarter. Notably, we did not reflect any favorable earnings impacting medical reserve development in the quarter. Out of prudence, due to the potential for the cyberattack to affect claims receipt timing, we reflected an additional $800 million of claims reserves. We'll continue with a judicious view as we |
7,360 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | claims receipt timing, we reflected an additional $800 million of claims reserves. We'll continue with a judicious view as we progress over the next several quarters. Turning to the performance of our businesses. The most important takeaway is they are growing and performing at a level, which allows us to maintain the adjusted earnings per share objectives we established last November, even while taking on the business disruption impacts of the Change Healthcare attack. At UnitedHealthcare, revenues of $75.4 billion grew nearly $5 billion. Within our domestic commercial membership, we're off to a strong start, powered by disciplined growth, serving 2.1 million new consumers in the first quarter. We are encouraged by the momentum and positive customer response to our differentiated offerings and look forward to building further upon that momentum heading into '25. For Medicare Advantage, as you would anticipate, we are deeply into our '25 planning activities. As we finalize our '25 benefit designs over the next several weeks, we will build competitive offerings that once again appropriately reflect the funding and cost environment. We approached this last year with a deliberate three-year plan, which continues firmly on track and positions us well going into '25. Our Medicaid business ended the first quarter with 7.7 million members. As Andrew noted, key wins in Texas, Virginia, and Michigan demonstrate the value state customers see in our offerings. In Virginia, UHC was the highest-scoring plan with particular strength in member-centric care, benefits and service delivery, quality, and value-based payments. In Texas, UHC was awarded the maximum number of possible service areas, expanding the number of people we will have the opportunity to serve. And in Michigan, UHC achieved perfect scores in such critical consumer-centric areas as social determinants of health and health equity, further solidifying our value proposition. Optum Health's revenues grew by 16% to $26.7 billion, as we increased the number of |
7,361 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | further solidifying our value proposition. Optum Health's revenues grew by 16% to $26.7 billion, as we increased the number of patients served and are on track to approach five million patients in value-based care by year end. For the most complex patients that Optum Health serves, we have engaged 75% through the first quarter this year, a significant increase in the number of patients engaged over last year. This reflects progressively earlier connectivity with patients and the ability to improve their health outcomes and experiences more rapidly. Optum Rx revenues grew 12% to $30.8 billion, driven by new client starts, continued expansion within existing partnerships, and growth within pharmacy services. Optum Insight, as you know, is where the Change Healthcare business resides. In the quarter, about $500 million of the $870 million total impact is within Optum Insight. Just under half of this are direct response costs, think clearinghouse restoration activities, which we have excluded from adjusted earnings, and slightly over half are the business disruption effects, which are not excluded from adjusted earnings. For many of the impact of Change Healthcare services, transaction volume drives revenues. So the effect of the attack in the period is one of keeping all the lights brightly burning at full readiness to resume services, while revenue production was essentially suspended. To be clear, the Optum Insight team did the critical and right thing, promptly shutting off services and finding any method possible to keep the care system working, including helping clients find alternative solutions. Coming out of this incident, the team will be working tirelessly with customers to recover transaction volumes and demonstrate that Change Healthcare is ready to serve and is more valuable than ever. Beyond Change Healthcare, the Optum Insight revenue backlog increased to nearly $33 billion, growth of over $2 billion from a year ago, driven by health system partnerships to provide business process and information |
7,362 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | growth of over $2 billion from a year ago, driven by health system partnerships to provide business process and information technology services. A couple of other items of note that were affected by the cyberattack. Days claims payable in the first quarter were 47.1 compared to the 47.9 in the fourth quarter '23, and 47.8 a year ago. The accelerated payments to care providers and the Brazil sale reduced what would have been our reported measure for the quarter by about three days. The medical cost payable balance increased $1.6 billion from year-end '23 to $34 billion. The change reflects a $3 billion increase in the incurred but not yet reported component or IBNR. This is a result of the prudent ongoing claims receipt assessment, offset by a $1.6 billion reduction in the fully processed claims component, due to care provider payments acceleration. Cash flows from operations in the quarter were $1.1 billion, impacted by about $3 billion due to the funding acceleration to care providers and collection extensions to affected customers, and were additionally impacted by the timing of some public sector receipts. To summarize, a continued focus on better serving patients and the health system underpins our mission and growth drivers, which remain strong. And as we move further into this year, the broadly strong performance across our enterprise allows us to continue to expect full year adjusted earnings per share in the range of $27.50 to $28.00, even as we incorporate a $0.30 per share to $0.40 per share of business disruption impacts. Now I'll turn it back to Andrew. |
7,363 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thank you, John. As we look out over the next several years, we, like many others, see a healthcare environment in need of improvements in quality, value, simplification, and consumer responsiveness. While we're a comparatively small part of the $5 trillion US Health System, UnitedHealth Group's strategy is focused on helping to meet those very needs and we're well-positioned to do so. Our focus on understanding opportunities to align incentives, notably led via our value-based care offerings, demonstrates what can be achieved through partnership and realignment of ways of working. Our commitment to improving all we do for consumers stimulates our drive to help bring care to patients, where they need and want it, at prices and with an experience worthy of the 2020s. We have a proven commitment to making available our insights and innovations widely and quickly throughout the market alongside our relentless multi-payer orientation at Optum. We remain committed to partnering with others throughout healthcare to help make the health system more modern and responsive. Our success depends on enabling partners and customers outside our company to succeed. The combination of this strategic design, strengths, and behaviors underpins our high confidence in our ability to navigate the inevitable environmental change and challenge, and it reinforces our confidence in our ability to perform and grow strongly as you have come to expect from us. With that, operator, we'll turn to questions.
Operator: Thank you. The floor is now open for questions. [Operator Instructions] And we'll go first to Lisa Gill with JPMorgan.
Lisa Gill: Thanks very much and thanks for all the comments. I just want to go back to your comment around your three-year plan as it pertains to V28, does the 2025 final bid change anything around that plan? And how do I think about the impact in the quarter of V28 in both Optum Health as well as on the UnitedHealth side? |
7,364 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Yeah, Lisa, thanks so much for the question. Yeah, as we've said a few times and certainly repeated this morning, we've looked at the changes that CMS finalized last year really thoughtfully and we see this as a three-year strategy in response. Obviously, it's phased in over three years. We want to make sure we don't do anything that chases short-term growth, for example, but puts a lot -- puts at risk long-term sustainability. What you're also not going to see from ours is a kind of knee-jerk reaction between growth and margin. We want to be very focused on ensuring that year in, year out, we're a super reliable performer in this environment. As you look at the most recent final rate, I don't think it really changes the story. Obviously, a little disappointing that we don't think CMS really reflected what we've seen over the last year in terms of actual in-market medical trend. But in reality, it's just a little extra pressure for '25 on top of what we'd already seen previously. We're well-positioned for that in terms of all the work we've been doing really from the get go last year. Really from February last year, we've been getting ourselves lined up for this. You're seeing that reflected in Q1 in a few really key features, right? So you're seeing really strong cost control inside the company as you'd absolutely expect us to do, making sure that we're not incurring any expense that we don't need to support our members and patients on the outside of the organization. You saw us take a very thoughtful bid strategy last year, and of course, we continue to focus on how to make sure that we manage medical cost as effectively as possible, ensuring quality of care delivered and avoiding waste. All of that plays through. I'm very, very pleased with how this first quarter has played out in that respect. If you look at the performance of Optum Health and our MA business within UnitedHealthcare, both very strong performance during this quarter despite the pressure that's been incurred on them from the rate |
7,365 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | both very strong performance during this quarter despite the pressure that's been incurred on them from the rate notice last year and I think that bodes super well for the rest of this year and the strategy that we've laid out for the next three. Thanks, Lisa. Next question. |
7,366 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Josh Raskin with Nephron Research.
Josh Raskin: Hi. Thanks. Good morning. Can you just explain what medical costs you categorized as accommodations to support care providers? I think the UM management that you guys are talking about, what a certain medical -- what puts a certain medical expense in that bucket? And then when you look at your actual claims received or claims processed inventories, what percentage of a normal or expected quarter did you actually see in the quarter versus how much did you just sort of put into IBNR?
Andrew Witty: Josh, thanks so much. I'm going to ask Brian Thompson in a second just to give you a little bit more color on the first part of your question. Listen, I think by the time we got to the end of the quarter, we had the overwhelming majority of what we'd anticipate in receipt -- in terms of claims received into the organization because it's always a little bit tricky to be absolute about that, because you're kind of comparing against what you would have expected, and as you obviously know, every quarter you see corrections both up and down in terms of actual claim submissions catching up with what you may have estimated and that's been obviously the feature of this marketplace. But overall, I would say, UHC claims receipt was very, very close to normal by the time we closed the quarter. But maybe, Brian, you could give a little more color commentary on how you would characterize some of that relief we gave. |
7,367 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Brian Thompson: Sure. I appreciate the question. Yeah, Josh, I believe we started March 8th and what we did, I call it foregone utilization management protocols and those are really in two categories. The first is we suspended our inpatient level of care reviews, where we assess for appropriateness of inpatient versus outpatient and that was the lion's share of our adjustment and we've got a long history of understanding those elements. It's just a unit cost adjustment. So pretty simple and easy to estimate and adjust for. The second element inside those practices was some outpatient prior authorizations that we also suspended. Those were a smaller element inside this quarter. Those will play out a little bit more in next quarter as you think about that lag between notice and actual incurral date. But again, pretty easy for us to estimate. These are practices we've had in place for a very long time and feel comfortable about the adjustment that we made.
Andrew Witty: Brian, thanks so much. And just again to confirm, as you heard from John, we brought those processes back into play in the last few days. Next question.
Operator: We'll go next to A.J. Rice with UBS. |
7,368 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to A.J. Rice with UBS.
A.J. Rice: Thanks. Hi, everybody. Congratulations on working through all this. Maybe just to make sure I understand a little more, the $800 million reserve that you're holding out and you did comment, you didn't take any prior period development to the bottom-line. I guess it sounds like you've used the word prudent several times in describing that. How much -- just maybe to follow-up on the last question, how much of that is things that either from which you get insight from Optum Health or from your own ability to look at prior year claims versus what you've seen so far is what you really think is going to happen and how much of that is sort of add-on just because of the moving parts out there? And then it sounds like you're basically saying that the care dynamics are similar, is there anything you call out outpatient, inpatient that suggest any variance relative to your MLR assumptions for the year when you started out?
Andrew Witty: So I'm going to ask John just to comment on the $800 million more specifically. I mean, I think as we said a couple of times, A.J., really not seeing anything stand out in terms of care pattern differentiation from what we really expected. I mean, as we mentioned earlier, that kind of pressure we saw at the end of Q4 and rolling into the very beginning of the year around some kind of winter syndrome vaccination dynamics, we talked about a lot last time. As expected that did subside. Beyond that, I would -- which was what we were anticipating. Beyond that, I wouldn't say there's anything really to call out within all of that. John, could you maybe go a little deeper on the $800 million? |
7,369 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Yeah, good morning, A.J. Yeah, so picking up on comment Andrew had made earlier, so what you're really doing there is estimating what you didn't see. So claims receipts that you may have not received in the quarter and trying to make an accommodation for that, as you said, a prudent accommodation for that. Just to acknowledge, that there clearly had to be some disruption in the quarter in claims patterns and so you're trying to make some estimation in that zone to anticipate that. So you need to put it somewhere in the zone, it's not zero and it's not 800, somewhere in between, probably as you think about those elements and where you might -- where you might land and so as we look out. And you should expect that we'll probably continue with a judicious view over this, over the next several quarters actually also. We want to make sure that we've got full visibility into this that the claims are flowing and as we sit here on April 16th, it does. We see at UHC. We see a fairly normal claims receipts and payments flows going on at this point, but we really want to be careful on that because we know there are certain care providers out there that may have been left out a bit, and so we'll continue to be very judicious next quarter also in terms of assessing that.
Andrew Witty: Thanks, John. Thank you, A.J. Next question.
Operator: We'll go next to Justin Lake with Wolfe Research. |
7,370 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks, John. Thank you, A.J. Next question.
Operator: We'll go next to Justin Lake with Wolfe Research.
Justin Lake: Thanks. First, I just wanted to quickly follow-up on A.J.'s question here around $800 million. Can you just be specific around, is that conservatism related to 2023, meaning you would have had up to $800 million of development that would have benefited the quarter or are you saying that you just took extra reserves that actually impacted Q1? Because we're looking at an MLR that's 50 basis points above where you kind of expected it and if you're saying trend is in line, so we're trying to figure out, was there a 50 basis point miss or are you saying that really that's just the conservatism here. And then any -- my question was really around the relative visibility on cost trend, right? Last year, it was somewhat opaque. You kind of told us that there was some uncertainty and then if that uncertainty turned to certainty around, hey, trend is higher in Q2. How do you feel about your visibility this year? Do we have to wait till 2Q to kind of be able to declare that, hey, we're kind of through this and you're not seeing what the rest of the industry is seeing or do you do you think we probably have to get that updated again in second quarter? And lastly, any commentary on Q2 MLR and where you think you end up in the full year range for MLR would certainly be helpful if you could provide? Thanks. |
7,371 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Okay, Justin. Thanks for those questions. Let me -- I'm going to ask John in a second just to go back and again just give you a little bit more definition around the $800 million as you asked. Just in terms of -- and just in terms of cost trend and let me make a couple of comments and ask Brian maybe to go a little deeper as well and then come back to John. As I look at the cost trend this year versus last year, some big differences. So last year, really I think the core of the story of what led to that sort of step shift, if I can put it that way, in early Q2 -- Q2 of last year. I think that was really -- and the hindsight tells us that was really around a kind of post-COVID or end of COVID story playing out in terms of capacity coming on stream most importantly and to some degree of pent-up demand. I actually think the capacity coming on stream was as much an issue driver of that as anything else. So I think to some degree a one-off. We don't see anything like that. We've seen much more stabilization. We haven't seen a step down from that trend. We'd be super clear about that. We haven't seen it kind of go back down again, but we've certainly seen that kind of sustained activity without aggressive acceleration. And then the other thing, I would say to you is, as you would expect, given that shift we saw last year in the intervening year, we've put in a lot of sensing mechanisms across our organization, both in UAC and Optum, to look for early warning signals of changes, quite a low granularity in terms of trying to figure out how this pattern plays out. Now as all our actuaries and any actual will tell you that the gold standard of knowledge on trend is a paid claim, but nonetheless, we've tried to put in place a lot more prospective sensing capability. And again, that's kind of consistent with what we're sharing with you. So we're not really anticipating a big change there. I mean, obviously, the future is the future, but as we sit today, everything looks pretty much as expected. Brian, you may |
7,372 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | I mean, obviously, the future is the future, but as we sit today, everything looks pretty much as expected. Brian, you may want to give a bit more from a UHC perspective. |
7,373 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Brian Thompson: Yeah. Thanks, Andrew. And I think you summarized it well. I'll reiterate what you heard from John, which is what we're seeing in these underlying service types, inpatient, outpatient, et cetera, are in line with what we had planned for, so I'll reiterate that. Just to add to that level of improved visibility this year over last, certainly COVID being the biggest driver, but also re-determinations. Last year, we were at the beginning of that. This year, we're nearing the end of that. So two key unknowns a year ago I think that contributed to perhaps a little less visibility, both of which I think we've really got a better view to this year. And the last thing I'll just point out is, as we've paced through one-one, I also feel good about our business mix. Again, early in the stages of evaluation of that, but how our growth has changed and what we've seen in those profiles from the growth that you're seeing in our Commercial business to the growth in our Medicare business as well, really feel good about all those elements. So, yes, optimistic about the rest of the year and how it's playing out against what we had planned for.
Andrew Witty: Great. Thanks, Brian. And John? |
7,374 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Great. Thanks, Brian. And John?
John Rex: Yeah, Justin, good morning. So I think the way you look at it, so overall the net view being, so we didn't let any earnings or medical care ratio impacting development flow-through into the quarter. And when you look at it, so you can come at it, as to the normative course of assessments would have indicated some potential for favorable development in the quarter. We would -- we took a position also that there was likelihood that there were claims we didn't receive. And so in terms of the claims completion factors and such and so how that may have impacted and so you're really netting that all off in the course of the quarter to try to just normalize that out, not having any impact from any of those -- from those elements, and taking a pretty prudent view of where you might be in terms of the claims you received. In terms of your question here on the Q2 MCR, at this distance, I put it in a similar zip code to 1Q, including similar impact from the cyber effects that we had also, and as I noted in response to A.J.'s question, we'll be continued to be very judicious as we look at those patterns also on claims receipts. So we'll continue with the judicious view of how we think about -- how we think about development and those impacts as we step out here in the next couple of quarters to make sure we're getting our claims receipt timings fully incurred here.
Andrew Witty: Great. John, thanks so much. Next question.
Operator: We'll go next to Stephen Baxter with Wells Fargo. |
7,375 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Great. John, thanks so much. Next question.
Operator: We'll go next to Stephen Baxter with Wells Fargo.
Stephen Baxter: Yeah, hi, thanks. The business disruption costs you've projected beyond the first quarter are, I think, smaller maybe than most had expected despite the fact we've heard commentary from stakeholders reducing their dependence on Change Healthcare during the quarter. I guess, what are you seeing from customers on that front? I guess, how much of that recovery do you have on the revenue line? Do you have line-of-sight to versus you have to drive throughout the balance of the year to get to that no impact to 2025 that you seem to expect? Thank you.
Andrew Witty: Yeah, Stephen, thanks so much. So I'm going to ask Roger Connor, who runs Optum Insight to give you a little detail on this. First off, so I just want to -- I just want to take a moment to pay credit to the teams for the speed in which they brought back the overwhelming majority, the functionality of Optum -- of Change Healthcare after the attack. It's been extraordinary example of really the resources of UHG, and frankly, the support of many of the biggest companies across America in the tech environment coming in to help recover from this particular attack, which was straight out an attack on the US Health System, and designed to create maximum damage I think. We've got through that very well in terms of the remediation and the build back to functionality, and Roger, maybe you could share a little bit of what you're seeing and expect in terms of customer dynamics over the next few months. |
7,376 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Roger Connor: Yeah, we'll do. Stephen, thanks very much for the question. So the way that we're thinking about the whole cyberattack response is two key areas of focus. First of all, as Andrew mentioned, good progress on system restoration. If you look at the biggest areas where we have the largest number of customers, that's pharmacy, claim, and payment, we're up to 80% functionality and that's continuing to improve day-by-day. Now we've still got work to do. We've got another set of products coming online in the number in the coming weeks, but pleased with that progress. I think your question is really about our next focus, which is recovering the business and this is about bringing those products back, but actually bringing them back stronger where we can. We're adding functionality where we can too. But then also bringing back customers, who because of the outage have to go elsewhere to get things like their clearance house support. Now we are confident in our ability to do that. Why? Well, first of all, the portfolio and the differentiation we have, which is good. But also, as you can imagine, we're talking to those customers all the time and they want their functionality back. They like what they've got or they had with Change and they want to get that back. So we're working with them to ensure that we can actually do that. Also, we provided financial support to a number of our clients and they appreciate that. They have said to us that they appreciate it. That's a signal that we are committed both to them, but then also to this marketplace as well. So when you add those elements up, Stephen, that's where we're confident. We've got more work to do. This has been a heavy lift and we're going to continue that work. But that's why we're confident in getting back to that baseline performance in 2025. |
7,377 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Roger, thanks so much. And I think, Stephen, what you heard in Roger's response there is a couple of really important features of the character of UnitedHealth Group, super high resilience and we will always stand by our customers and clients, and when an attack like this happens, which puts our customers and clients at risk, we will do whatever it takes to make sure they get through that, whether it's technical fixes or financial support, we are going to stand by our clients, who in this case are the providers and the systems across America who look after American patients and we will do that. And I think that means a lot to a lot of people and it's an important capability to have running through the backbone of American healthcare. With that, Stephen, thanks for the question. Next question.
Operator: We'll go next to Kevin Fischbeck with Bank of America.
Kevin Fischbeck: Great. Thanks. Just want to go more -- a little bit more into the visibility that you guys think that you have into claims today. It sounds like you feel like you're largely back, but I guess, where would you say today that you are from a percent visibility into claims versus the same time last year? And I know that there's forecasted improvement, but I think there's a lot of focus on the ability to price 2025 correctly. So by the time you're submitting your MA bids, how much back to normal? What percentage back to normal do you think you'll be from a claims perspective at that point? And then finally, I'm used to hearing you guys reiterate 13% to 16% long term EPS growth, but I didn't hear that in the prepared remarks. I just wasn't sure if that was due to time or whether there was anything that you were trying to say there. Thanks.
Andrew Witty: All right. So I'm going to ask John to comment on your substantive question, Kevin, and I'm going to ask you just to stay on the line for my last paragraph for closing comments for the second part of your question. John? |
7,378 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Good morning, Kevin. So as we sit here today on April 16th, I would say, UHC is pretty much back to normal levels in terms of claim submission activity. We view it as normalized now. That we're seeing claims slowing like they -- we'd expect them to be flowing and moving along. So that's all progressing quite well, which assists a lot with the piece that you were just describing here in terms of where we think that is and as we move forward and look over the next month plus to finalize our bid submissions and such. So feel good about that in terms of our visibility and insights.
Andrew Witty: Yeah. Thanks so much, John, and thanks so much, Kevin. Next question.
Operator: We'll go next to Nathan Rich with Goldman Sachs.
Nathan Rich: Hi. Good morning. Thanks for the question. I wanted to ask on the reported DOJ investigation. I'd be curious, has the company had kind of dialogue with the DOJ and do you have a sense of timeline for what the next steps might be as we look about what -- for what the possible outcome of this process could be?
Andrew Witty: Hey, Nathan, thanks so much for the question. Listen, I think you'd probably expect we don't comment on these sorts of matters and I don't think it would be appropriate to do so today, and certainly, we never have done in the past. So it's not something we're going to get into in the call, but I appreciate the interest. Thanks. Next question.
Operator: We'll go next to Andrew Mok with Barclays.
Andrew Mok: Hi. Good morning. Commercial risk and ASO membership both came in above the high end of your initial guidance, can you help us understand what drove the membership -- a better membership results for each segment? Thanks.
Andrew Witty: Thanks so much for the question. I'll ask Dan Kueter, who runs our E&I business from UHC to respond to that. Dan? |
7,379 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks so much for the question. I'll ask Dan Kueter, who runs our E&I business from UHC to respond to that. Dan?
Dan Kueter: Yeah. Hi, Andrew, and thanks for the question. Certainly encouraged with the broad based growth, share gaining growth, I would say, in our Individual segment, our Local Market segment, and our National Accounts business. Some of the key drivers underlying that, about a third of our Group growth gains were attached to our most innovative products and the expansion of those into 37 states now, on a fully-insured basis, to be -- and also fully available nationally on an ASO fee-based business. Specifically inside the risk business, our individual and family exchange-based plans were a significant driver of the growth. We've seen some latency. From membership, we expected that would have come in from re-determinations into the final portions of 2023, now begin to emerge into 2024. That's been a significant contributor to that risk-based growth in the first quarter. As a punchline, I like our growth, I like the pricing, very much like the profile of both the groups and the consumers that we're attracting. And finally, I'm really pleased with the consumer experience that our teams are delivering to those that we serve. Thanks for the question.
Andrew Witty: Great. Thanks so much. And as you saw, Dan's organization delivered an extraordinary two million member growth in the first quarter, one of the highest growth rates we've seen for many, many years. And I think that really comes down to relentless focus on modernization of service offer and then delivery of that service offer, and I'm very proud of the whole team in the UHC Commercial businesses domestically for what they've done. Next question.
Operator: We'll go next to Lance Wilkes with Bernstein. |
7,380 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: We'll go next to Lance Wilkes with Bernstein.
Lance Wilkes: Thanks. Question on Optum Health. As we're looking at outlook there, we've been really focused on capacity growth in the systems, do you guys have any insights for your capacity growth in Optum Health? Obviously, you've been taking some cost actions there, so interested in hiring trends. And then second, have you been renegotiating risk deals? I know that there was likely some of that for '24. What's the outlook for that and the impact of that in '24 and the outlook of that for '25? Thanks a lot.
Andrew Witty: Yeah, Lance, thanks so much. And I'm glad you've asked about Optum Health. I'm going to ask Dr. Desai to respond to that. Amar runs our Optum Health business. He has been doing a great job of continuing to mature that business for us, which for me, I think is one of the great headlines of Optum Health. Its continuous maturation as a sophisticated value-based care delivery organization, and Amar, maybe you could respond to Lance's question. |
7,381 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Amar Desai: Yeah, thanks for the question, Lance. I'll take the first one in terms of hiring trends. We continue to work with more providers in a deeper way continuing to grow across a range of arrangements. As you know, physicians across the country work with us in contracted affiliated arrangements as well as employed arrangements and we continue to have strong partnership and growth, both organically and also through some of our inorganic M&A activity. We don't see a capacity constraint there. In fact, we've continued to see incredible growth with our payer partners to the second part of your question. The risk partner growth continues to increase across multiple payers. It's being driven by some of the funding and benefit dynamics that are out there. Folks are looking for a real stable partner to be able to grow with. We have worked with them continuously in terms of our contracts, both looking at the benefit and funding changes and ensuring that the funding level is appropriate for the risk that we're taking on, and to be able to provide very high quality care across our membership. So we're very proud of the growth we've had and we'll continue to do so. Thanks.
Andrew Witty: Great. Amar, thanks so much. Next question.
Operator: We'll go next to Sarah James with Cantor Fitzgerald.
Sarah James: Thank you. We wanted to understand a little bit better the $3 billion in IBNR. So just our back-of-the-envelope math suggests if 15% to 20% of claims from UHC run-through change, post-event that would be like assuming a third of the change-related claims are delayed, is that in the ballpark of where your change completion factor assumptions were? And keeping that conservative assumption of a claims like throughout the year, what does that imply for the seasonality of the remaining $0.41 to $0.61 GAAP impact from change?
Andrew Witty: Sarah James, thanks so much. John? |
7,382 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Sarah James, thanks so much. John?
John Rex: Yeah. So I don't know if I'd kind of go right with some of those stats that you pulled out in terms of where those fell, but here's some insights I can offer on that. So, one of the elements we wanted to break out on the IBNR component is, so, as you know, what we report on the balance sheet you received this morning, medical costs payable is a combination of IBNR and medical claims payable. And so we're hoping to provide some more transparency for you as you looked at the quarter and such, and a $3 billion increase in IBNR is significant. And then offsetting that on the -- on that line item would have been the -- really the funding advances. The component where we just made sure that as soon as the claim was in-house processed, we were speeding it out-the-door to get it to providers. That was one of the components in addition to the interest-free loans we made that we were helping the provider community -- the provider community with. As you talked -- as you discussed kind of where we were, let's say, today, we feel that UnitedHealthcare is essentially at normalized levels in terms of -- in terms of claims receipts. As we sit here, we're going to be super prudent in how we look at that because we know there are providers out there that could still be having trouble submitting claims, and still having troubles with payment flows and such, and so we're going to be very appropriately constrained in how we think about that dynamic playing out here over the next -- over the next couple of quarters. But really, those are the kind of mechanics of what's going on between the IBNR component that you spotlighted and the full line of medical costs payable.
Andrew Witty: Right. Thanks, John. Next question.
Operator: We'll go next to Gary Taylor with Cowen. |
7,383 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Right. Thanks, John. Next question.
Operator: We'll go next to Gary Taylor with Cowen.
Gary Taylor: Hi. Good morning. Just wanted to follow-up on that point, John. My understanding is, on the IBNR that you report in your Qs and Ks includes unprocessed claims, inventories, so the $3 billion, is that just going to tie to the number we see when the Q comes out? Are you saying the $3 billion really is true unreported claims at this point?
Andrew Witty: Thanks so much, Gary. John?
John Rex: $3 billion is IBNR directly, that is to your point. That is the IBNR component of it, Gary.
Andrew Witty: Okay. Thanks, John. Next question.
Operator: We'll go next to Erin Wright with Morgan Stanley.
Erin Wright: Okay, thanks. On capital deployment, you didn't change your expectations for share repurchases, but how should we think about the priorities more broadly, whether it's M&A or otherwise in your ability to be opportunistic on that front? Thanks.
Andrew Witty: Erin, thanks so much. I'll ask John to comment on it.
John Rex: Yeah, Erin. Yeah, we didn't update any of those components here. We continue to take a very balanced view in terms of how we think about our opportunities. You saw, certainly, that we had activity in the quarter from -- in terms of both share repurchase and dividends. Also, we continue with robust opportunities in the marketplace in terms of other capabilities that we are looking at. So that all continues strong. So you'll see us continue to balance those out nicely in terms of -- in terms of the opportunities that are out there and with capacities really to approach all those elements strongly. |
7,384 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Yeah, and I continue to see very interesting diverse pipeline of M&A opportunity across the marketplace in terms of business areas that we have interest in. As I think you see some of the funding changes play out across the -- across the next few years, I suspect that may also create new opportunities for us as different companies assess their positions. I think how we look at this situation is we have a good strong strategy for how we navigate through this dynamic. You're seeing that play out super well in the first quarter performance of Optum Health and UHC and I think it gives us a sense of real confidence as we look not just in terms of our performance, but potentially how we might think about M&A opportunity. And as you rightly said, be somewhat opportunistic if those moments arrive. Next question.
Operator: We'll go next to Whit Mayo with Leerink Partners.
Whit Mayo: Thanks. Good morning. Just back on the 2025 rate notice, I think you're -- if I'm hearing you correctly, it sounds like you're framing this as modestly disappointing, but perhaps manageable. Just any more color on growth expectations for next year? And then if you could elaborate on the broker agent changes, what this could potentially mean for your strategy seems like a meaningful change. Don't know, if you think about investing more into captive broker strategies, just any color would be helpful. Thanks.
Andrew Witty: Thanks so much for the question. I mean, obviously, we're not going to get into give kind of '25 numbers or expectation just yet, but Tim Noel, who runs our M&R business, certainly give you some good perspective on the rest of your question. Tim? |
7,385 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Tim Noel: Yeah, good morning, Whit. Thanks for the question. So on the final notice and some of the distribution elements of that, we continue to believe that there's opportunities to improve the distribution environment in Medicare Advantage and have been in a dialog with CMS for several years on how to do that. Some of the elements of the final notice that were published recently are directly in line with some of our recommendations and some of them are relatively consistent, but not totally as we had conceived them. I would also say right now, it's a little bit early to comment on how this might rebalance some of the channel mix, as still some questions on how some of the key elements of that will be rolled out. So we're still waiting for a little bit more detail before we can get more specific on how it impacts go-to-market in '25.
Whit Mayo: Great. Thanks so much, Tim. Next question.
Operator: We'll go next to Ann Hynes with Mizuho Securities.
Ann Hynes: Hi. Good morning. So, I would say your commentary on care patterns is definitely more positive than what investors feared. And you referenced several times that trend came in line with your expectations, can you actually tell us what growth rates you're assuming like the major trend categories in guidance, whether that's inpatient and outpatient, and maybe some year-over-year growth versus historical averages? And within that, can you specifically talk about what you're assuming for MA? That'd be great. Thank you.
Andrew Witty: John, would you like to start that? |
7,386 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | John Rex: Yeah. Ann, good morning. So the components that I would call outliers are the similar components that we've talked about for a while here in terms of trend outlooks. So in particular, still go back to outpatient care for senior, what we've seen in orthopedic, cardiac, those kind of categories primarily have been the big factors. I think you brought up a really important point though. So the percentage growth in those was much bigger last year. You're coming off an environment where both the supply side had been constrained and the willingness of seniors, in particular, consumers to access that environment had been constrained for a couple of years. So those percentage factors were quite significant. You heard us talk about very significant levels on those double-digit levels of last year as we looked at those. The way we look at those really though is because you would expect that to start normalizing in terms of the percentage change. So you really look at that in terms of the number of units consumed per patient served. And so you look at those levels, that's what we're talking about and we're seeing those kind of continuing at those levels. They're continuing at those levels in terms of the number of units consumed, delivered, and -- but those percentage levels, of course, would start normalizing out a little bit in terms of what you'd seen. So that continues to be the area. It's outpatient care for seniors. It's those categories that we'd call real outlier areas versus our historical levels of trend factors. The other -- the other historical levels of trend factors remain much closer to kind of our traditional views that we've always had as a company. In the quarter, other things you look at just to get indications, and by the way, we kind of vastly expanded all those areas. First fills, you've heard us talk about that a lot. Also, first fills in the quarter, an indication of outpatient care, physician visit activity, it's kind of normalized in there also in terms of stabilizing for us and many -- |
7,387 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | of outpatient care, physician visit activity, it's kind of normalized in there also in terms of stabilizing for us and many -- the many other factors of the company historically looked at. Thank you. |
7,388 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks, John. And maybe ask Brian maybe to give you a little bit more from a UHC perspective, and then maybe Heather also from a Optum perspective in a second, just maybe reflect a little bit on the work you're doing in terms of how we -- obviously, medical trend is one thing, then there's a question of how well we're able to engage with folks to actually help them manage their cost and maybe come to you in a second, Heather, on some of the word that you're leading at Optum. So Brian, first?
Brian Thompson: Sure. I think John said it well. The first headline is what we're seeing is what we plan for. But as he alluded to, some of those elements, we plan for them to be elevated year-over-year. And I don't want to lose sight of unit costs. We've talked for some time that multi-year provider group and hospital contracts renew a little later than perhaps the inflation we've seen and that is up year-over-year. The biggest driver was the outpatient. We're really pleased to see that in line with as John explained. But also, we've been able to see increases in Specialty Rx. We've planned for those. Those are in our pricing appropriately, et cetera. And we've certainly worked hard to create more access in the behavioral space. So all of those elements are modestly up, but up as we had planned for and they'll hopefully sound familiar to you because we spoke to all of these at our investor conference as we ended the year. So I think that's what I would summarize or add to John's commentary. Heather? |
7,389 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Heather Cianfrocco: So, I would say, incredibly consistent on the Optum side. So maybe just focusing on the medical first. So I mean, I think you've heard us say this, when you look, when we came out of last year, looking into this year, our focus was on the behavioral health, those outpatient sides consistent with UnitedHealthcare. And what was very important for Optum Health was using that capacity that Amar explained in our physicians, as well as those wrap-around services and our investments to ensure that we were looking at those care patterns. So, we feel really good about coming into this year. That work we've done, John referenced engagement with particularly those most complex numbers, 75% already engaged. And that PCP engagement, that member engagement is incredibly important, whether it's with their PCP directly or it's with some of our care -- our own care management wrap-around services. Because it identifies affordability opportunities incredibly quickly. It also identifies chronic disease that needs to be managed and it gets them connected to primary care quickly. So that's our focus for the year and that's why we feel good about that our ability to control utilization on the medical side particularly. And again, what we'll remind you is a reduced funding environment as we go into this year. So that's what brings us -- that's what brings that value-based care proposition, incredible value to all of our payers. On the pharmacy side, I call it, same things. For our clients, that specialty trend is a focus and we bring those products and solutions and that's why we've seen growth on the PBM side and our pharmacies around our clinical model and the continued innovative products that we're bringing to bear. So you're seeing that pull-through in the diversified growth and strength of the performance on the Optum Rx side as well. |
7,390 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Great. Thanks so much, Heather. Just one number Heather just shared with you there, which I'm very pleased of and it's a significant improvement year-over-year is that 75% engagement of the most complex members in Optum Health. And just for that, that means three out of every four most complex, most disadvantaged folks in the country have had a direct engagement with us in the first three months of the year. That's a great rate of touch. Opens the door then for us really getting to know those folks, helping the system, helping bring the system to support that many of these people, particularly those who are trapped in their homes have just not had access to that kind of care opportunity. That engagement is the first step of doing that. We have -- we really believe that is a key to how we not only deliver an effective care delivery from a cost point of view, but also make sure they get the very best quality that they deserve. So really pleased to see that step up year-over-year. I think we have time for one last question. If we could take that question, please, Jennifer.
Operator: Yes, we'll go to our last question from Jessica Tassan with Piper Sandler.
Jessica Tassan: [Technical Difficulty] A few more details maybe on the --
Andrew Witty: Sorry, we missed the beginning of your question.
Jessica Tassan: Hi. Sorry about that. I'm interested in a few more details maybe around the launch of Change 2.0. If you could talk a little about what payer receptivity to reconnection has been? Whether Change retains its legacy data rights post breach? And then just any change or updated thoughts on kind of the long-term thesis on Change for something like a real-time transparent payments and decision support network? Thanks so much.
Andrew Witty: Thanks very much for the question. Let me ask Roger to kick that one off. |
7,391 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Thanks very much for the question. Let me ask Roger to kick that one off.
Roger Connor: Yeah, Jessica, thanks very much for the question. First of all, on your first part about Change 2.0. Again, we're just confident in terms of our ability to reconnect. I mentioned the level of functional restoration that we have. You can imagine now the next stage of this is working with payer and provider to reconnect them in a safe way and an appropriate way, and all of the conversations that we're having with them are positive as we work through it. As I mentioned, there's still work to do and that's going to take us a little bit of time, but we're continuing to work through that functionality. I think it's important also to recognize, where Change sits in the overall Optum Insight portfolio. Change Healthcare was about 15% of our projected revenue for this year and when you look at -- that means I've got thousands of people who are continuing to work on other products outside of Change, not impacted by this and their underlying performance this quarter has been strong. If you adjust for the Change out, that business' earnings actually grew by around 10%. But what we haven't slowed either, as you mentioned, is our innovation agenda. The excitement of the Change portfolio across the Optum Insight portfolio is what we can bring to this market to transform it from an innovation point-of-view. And the real-time settlement work that we're doing, plus work that we've been doing with Optum Health on value-based care and provider risk enablement, that's all still going ahead. So in terms of our innovation agenda and the performance of the underlying business within Optum Insight, we're very positive. |
7,392 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty: Roger, thanks so much. And yeah, absolutely, Change Healthcare, the important acquisition for the group and I think important for the country that we own Change Healthcare. Without UnitedHealth Group owning Change Healthcare, this attack would likely still have happened and it would have -- it would have left Change Healthcare, I think, extremely challenged to come back because it was a part of UnitedHealth Group, we've been able to bring it back. We're going to bring it back much stronger than it was before. And secondarily, all of the reasons that we were interested in bringing the Change Healthcare capabilities and customer connectivity closer to UnitedHealth Group still absolutely holds fast in terms of the potential innovation around things like real-time settlement, clinical decision support capabilities, all of those products are the future services of the future, which ought to be characteristics of a modern healthcare environment. Those are all the reasons why we believe Change and Health -- and UHG were better together. This cyberattack has unfortunately created another true validation of why that was the right thing to do because it meant UHG was in position to resolve this much more quickly than I think would ever have been imaginable in a standalone situation.
Andrew Witty: Thanks, everybody, for all of your questions this morning. It's been a bit more of a complex quarter for sure this time around, but one that's also showed the depth and breadth of our company's capabilities. We're recovering quickly from the Change Healthcare attack and are a stronger, more capable company as a result. We're continuing to build our business based on the five strategic growth pillars that we're relentlessly focused on, and we're steadfastly confident in our ability to achieve our 13% to 16% long-term growth objective as we look to the years ahead. We very much appreciate all of your time and attention this morning. Thank you. |
7,393 | UNH | 1 | 2,024 | 2024-04-16 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: This does conclude today's conference. We thank you for your participation. |
7,394 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Operator: Good morning, and welcome to the UnitedHealth Group First Quarter 2025 Earnings Conference Call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here are some important introductory information. This call contains forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial and Earnings Reports section of the company's Investor Relations page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated April 17, 2025, which may be accessed from the Investor Relations page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Andrew Witty. |
7,395 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | Andrew Witty : Good morning, everyone. Thank you for joining us today. UnitedHealth Group started 2025 in two seemingly disparate ways. One, continued strong growth across our businesses. Our people are providing more health benefits and services to more members and patients as the market responds to our distinct offerings. The other way, however, was an overall performance that was frankly unusual and unacceptable. As you saw in our release, we're revising our adjusted earnings per share outlook for the year to $26 to $26.50. This morning, we'll detail for you the factors driving our revised outlook and how we plan to address them. I'll start with performance, which was impacted by two broad factors in our Medicare businesses: care activity and member profiles. It's important to recognize UnitedHealthcare and Optum are distinct businesses with different models, markets and products. In addition, Optum's Medicare business is multi-payer and not limited to just UnitedHealthcare members. Given these differences, changes in care activity and member profiles do not always follow the same patterns and can result in different impacts to each business. The respective teams are urgently responding to our performance challenges. Starting with care activity. In UnitedHealthcare's Medicare Advantage business, we had planned for 2025 care activity to increase at a rate consistent with the utilization trend we saw in 2024. Instead though, first quarter 2025 indications suggest care activity increased at twice that rate. Increases in physician and outpatient services were most notable and inpatient to a lesser extent. This increase in care activity was limited to our MA business and was not a factor in our commercial or Medicaid businesses. Care activity trends in those areas were as expected. Turning to member profile. Unanticipated changes in our Optum Medicare membership is impacting 2025 revenue. We added more new Medicare patients to Optum Health, a portion of whom were covered by plans that were exiting markets. They |
7,396 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | We added more new Medicare patients to Optum Health, a portion of whom were covered by plans that were exiting markets. They experienced a surprising lack of engagement last year, which led to 2025 reimbursement levels well below what we would expect and likely not reflective of their actual health status. Additionally, many of the current and new complex patients we serve are more affected by the CMS risk model changes that we are in the process of implementing. To be sure, it is complicated, but we're not executing on the model transition as well as we should. We must and will work to better anticipate and address these factors. Here still early in 2025, we believe they are highly addressable as we look ahead to 2026. Let me now talk specifically about what we're doing. First, we're ensuring the complex patients most impacted by the previous administration's Medicare funding cuts engage in clinical and value based programs. Second, we're consistently engaging with members in their homes and in post-discharge settings. Engagement remains the key. Third, we are appropriately assessing and updating the health status of new patients, especially those at high risk levels. Fourth, to more effectively transition to the new CMS risk model, we're investing significantly in improving physician clinical workflow to help ensure better care and timely insights on when and where care is most efficient and effective. Finally, our Medicare Advantage plan designs and pricing for 2026 will be fully informed by these trends. While we are decidedly unsatisfied with these results, our growth and foundation for improvement remains solid. UnitedHealthcare's Medicare Advantage business is on pace to serve an additional 800,000 people this year. Optum Health is on track to add 650,000 net new patients to value based care arrangements. In Medicaid, we are growing and continue to see positive momentum in closing the gap between people's health status and state rates, and we are very appreciative of our state customers for the ongoing |
7,397 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | the gap between people's health status and state rates, and we are very appreciative of our state customers for the ongoing productive discussions. Within Optum, so far this year, Optum Rx is off to a strong selling season, characterized by new wins as well as high retention of long-term customers. The growth of Optum Rx underscores the vital role that PBMs play in helping to reduce the price of drugs for consumers and the value that sophisticated purchases of healthcare, the employers, unions and governments see in our efforts to counter the high prices set by drug manufacturers. And to ensure that people have convenient access to high quality affordable drugs. That's more important than ever as drug manufacturers continue to increase what they charge Americans, in some cases, 10x what they charge people in Europe. The growth at UnitedHealthcare and Optum reflects the efforts of our 400,000 colleagues who come to work every day, thinking differently about what is possible, advancing new products and ideas while constantly refining existing programs, working to make things better for the people we are privileged to serve. Our team continues to innovate to make accessing care easier. For example, our newest tools have sparked a more than 40% increase in digital engagement among our senior members through the first quarter. We see evidence of this in sharply higher and earlier wellness visits to their primary care physicians, with total visits in the first quarter running far above the year-ago period. This will help members better manage their health and promote early detection of emerging issues. Further, Medicare Advantage also costs taxpayers less and delivers more to seniors than fee for service Medicare, especially in value based care arrangements. An essential approach in achieving both health outcomes and lowered costs is ensuring people get the care they need when and where they need it. And a good place to understand those needs better is in a seniors' home. Our HouseCalls program does just that. |
7,398 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | they need it. And a good place to understand those needs better is in a seniors' home. Our HouseCalls program does just that. HouseCalls, which is only available in Medicare Advantage, provides a thorough in home clinical visit at no cost to seniors. Following CMS' best practices for such care, our clinicians review a patient's medical history and current medications, conduct comprehensive physical exams, provide lab tests and screenings and coordinate necessary follow on care. HouseCall's clinicians closed millions of care gaps last year, helping people stay out of the hospital and the emergency department and referring those in need to appropriate social services to help them live healthier at home. This is Medicare Advantage innovation and value in action, helping drive proactive preventive engagement with the health system rather than more expensive reactive acute care. These benefits and innovations and their value to seniors and taxpayers will put an unnecessary risk by funding cuts in recent years to the Medicare Advantage program. While we continue to navigate those funding cuts to seniors benefits, it is significant that the recently released 2026 rate notice begins to reflect the accelerating care cost trends we've experienced for some time. This will provide much needed relief to seniors and reflects policymakers' understanding of the importance and the popularity of Medicare Advantage. Our work to deliver a better experience for people and lower costs spans our enterprise as it always has. Just within the last few weeks, we've introduced several initiatives that will help people in their health care journeys. Optum Rx will remove prior authorizations on 80 drugs accounting for more than 10% of our pharmaceutical prior authorizations. And Optum Rx has aligned payment models to pharmacies more closely to their cost for drugs. This helps pharmacies manage the ever increasing prices charged by drug manufacturers, enabling pharmacies to stock more medicines and ensuring more consistent pricing and access |
7,399 | UNH | 1 | 2,025 | 2025-04-17 08:45:00 | UnitedHealth Group Incorporated | 104,673 | charged by drug manufacturers, enabling pharmacies to stock more medicines and ensuring more consistent pricing and access to medicine for consumers. 26 million consumer calls were more accurately directed to the right advocate by an AI agent, improving the consumer experience and reducing wait times. We expect AI will direct over half of our calls to the best resource during 2025. All of these efforts are making things simpler and easier for consumers and providers, a goal we share with all health care stakeholders. Yet, we all have to contend with the stubborn fact that health care costs more in the U.S. than it should, even beyond the widely recognized disparities in drug prices. Common procedures such as heart bypass surgery, spinal fusions and heart stents are 4x as expensive in the U.S. as they are in Germany, Australia and the UK. Total hip replacements are twice as much. It's simply not sustainable. As we have made clear, we are as committed as ever to continuing down the path of transparency and affordability, ensuring that Americans get the health system they deserve. With that, I'll turn it over to John, who will discuss first quarter performance and full year outlook in more detail. John? |
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