UnitedHealth Group (NYSE: UNH) reported second quarter 2022 performance led by broad-based growth at Optum and UnitedHealthcare.
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UnitedHealth Group Corporate Headquarters (Photo: Business Wire)
“Customers are responding as we build on our five growth pillars, enabling us to move into the second half of 2022 with strong momentum serving ever more people more deeply,” said Andrew Witty, chief executive officer of UnitedHealth Group.
Based upon the first half performance and growth expectations, the company increased its full year net earnings outlook to $20.45 to $20.95 per share and adjusted net earnings to $21.40 to $21.90 per share. Growth in the second quarter was balanced across the company’s businesses, driven especially by continued strong expansion in people served at UnitedHealthcare and in value-based arrangements at Optum Health.
|
Quarterly Financial Performance |
||||
|
|
Three Months Ended |
|
||
|
|
June 30, 2022 |
June 30, 2021 |
March 31, 2022 |
|
|
Revenues |
$80.3 billion |
$71.3 billion |
$80.1 billion |
|
|
Earnings from Operations |
$ 7.1 billion |
$ 6.0 billion |
$ 7.0 billion |
|
|
Net Margin |
6.3% |
6.0% |
6.3% |
|
- UnitedHealth Group’s second quarter 2022 revenues grew $9 billion or 13% to $80.3 billion year-over-year, reflecting double-digit growth at both Optum and UnitedHealthcare.
- Second quarter 2022 earnings from operations were $7.1 billion with well-diversified contributions from across the enterprise. Adjusted net earnings of $5.57 per share increased 19% year-over-year.
- The second quarter 2022 medical care ratio was 81.5% compared to 82.8% last year, due to COVID effects and business mix. Favorable medical reserve development of $890 million compared to $500 million in the year ago second quarter. Days claims payable were 50.6, compared to 49.1 in the first quarter of 2022 and the second quarter of 2021.
- The second quarter 2022 operating cost ratio of 14.6% compares to 14.5% in 2021, reflecting continued productivity gains, offset by business mix and the investments the company continues to make to support future growth opportunities.
- Cash flows from operations for the second quarter 2022 were $6.9 billion or 1.3-times net income. The company returned $4 billion to shareholders in the second quarter through dividends and share repurchases and increased the dividend by 14% in June 2022. Return on equity of 27.9% in the quarter reflected the company’s sustained earnings growth profile and efficient capital structure.
UnitedHealthcare provides health care benefits globally, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to improving the value customers and consumers receive by improving health and wellness, enhancing the quality of care received, simplifying the health care experience and reducing the total cost of care.
|
Quarterly Financial Performance |
||||
|
|
Three Months Ended |
|||
|
|
June 30, 2022 |
June 30, 2021 |
March 31, 2022 |
|
|
Revenues |
$62.1 billion |
$55.5 billion |
$62.6 billion |
|
|
Earnings from Operations |
$ 3.9 billion |
$ 3.1 billion |
$ 3.8 billion |
|
|
Operating Margin |
6.2% |
5.6% |
6.1% |
|
- UnitedHealthcare second quarter revenues of $62.1 billion grew $6.6 billion or 12% year-over-year, reflecting broad-based growth.
- Second quarter 2022 operating earnings were $3.9 billion compared to $3.1 billion last year, reflecting strong growth in people served and continued medical and operating cost management.
- Total people served by UnitedHealthcare has grown by over 600,000 in 2022, including 280,000 in the second quarter. Growth was led by UnitedHealthcare’s community-based and senior offerings. The number of people served with domestic commercial benefit offerings has grown by over 250,000 over the past year, including 80,000 in the second quarter.
Optum’s health services businesses serve the global health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using market-leading information, analytics, technology and clinical insights, Optum helps improve overall health system performance: optimizing care quality, reducing care costs and improving the consumer experience.
|
Quarterly Financial Performance |
||||
|
|
Three Months Ended
|
|||
|
|
June 30, 2022 |
June 30, 2021 |
March 31, 2022 |
|
|
Revenues |
$45.1 billion |
$38.3 billion |
$43.3 billion |
|
|
Earnings from Operations |
$ 3.3 billion |
$ 2.9 billion |
$ 3.2 billion |
|
|
Operating Margin |
7.3% |
7.5% |
7.3% |
|
- Optum second quarter revenues of $45.1 billion grew $6.8 billion or 18% year-over-year, with double-digit growth at each business, led by Optum Health. Operating earnings were $3.3 billion compared to $2.9 billion last year.
- Optum Health revenue per consumer served increased 30% over the year ago period, driven by growth in the number of people served under value-based care arrangements and continued expansion of the care services offered, including in-home, digital, clinic-based and outpatient services.
- Optum Insight’s revenue backlog increased by $2.3 billion to $23.6 billion compared to a year ago. Growth was driven by comprehensive managed services for health systems and an expanding suite of information technology and data analytics offerings.
- Optum Rx’s revenue growth of 10% in the second quarter reflects continued success in serving new clients as well as further expansion of pharmacy care services offerings, including specialty and community pharmacy. Adjusted scripts grew to 357 million compared to 342 million last year.
About UnitedHealth Group
UnitedHealth Group (NYSE: UNH) is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone through two distinct and complementary businesses. Optum delivers care aided by technology and data, empowering people, partners and providers with the guidance and tools they need to achieve better health. UnitedHealthcare offers a full range of health benefits, enabling affordable coverage, simplifying the health care experience and delivering access to high-quality care. Visit UnitedHealth Group at www.unitedhealthgroup.com and follow @UnitedHealthGrp on Twitter.
Earnings Conference Call
As previously announced, UnitedHealth Group will discuss the company’s results, strategy and future outlook on a conference call with investors at 8:45 a.m. Eastern Time today. UnitedHealth Group will host a live webcast of this conference call from the Investor Relations page of the company’s website (www.unitedhealthgroup.com). Following the call, a webcast replay will be available on the same site through July 29, 2022. The conference call replay can also be accessed by dialing 1-888-203-1112, Conference Code: 5961010. This earnings release and the Form 8-K dated July 15, 2022, can also be accessed from the Investor Relations page of the company’s website.
Non-GAAP Financial Information
This news release presents non-GAAP financial information provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of the non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release.
| UNITEDHEALTH GROUP | ||||||||
| Earnings Release Schedules and Supplementary Information | ||||||||
| Quarter Ended June 30, 2022 | ||||||||
| – Condensed Consolidated Statements of Operations | ||||||||
| – Condensed Consolidated Balance Sheets | ||||||||
| – Condensed Consolidated Statements of Cash Flows | ||||||||
| – Supplemental Financial Information – Businesses | ||||||||
| – Supplemental Financial Information – Business Metrics | ||||||||
| – Reconciliation of Non-GAAP Financial Measure | ||||||||
| UNITEDHEALTH GROUP | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||
| Revenues | |||||||||||||||||
| Premiums |
$ |
63,896 |
|
$ |
56,233 |
|
$ |
127,966 |
|
$ |
111,719 |
|
|||||
| Products |
|
9,496 |
|
|
8,433 |
|
|
18,836 |
|
|
16,773 |
|
|||||
| Services |
|
6,645 |
|
|
6,099 |
|
|
13,017 |
|
|
12,017 |
|
|||||
| Investment and other income |
|
295 |
|
|
556 |
|
|
662 |
|
|
1,008 |
|
|||||
| Total revenues |
|
80,332 |
|
|
71,321 |
|
|
160,481 |
|
|
141,517 |
|
|||||
| Operating costs | |||||||||||||||||
| Medical costs |
|
52,093 |
|
|
46,546 |
|
|
104,616 |
|
|
91,450 |
|
|||||
| Operating costs |
|
11,709 |
|
|
10,359 |
|
|
23,110 |
|
|
20,582 |
|
|||||
| Cost of products sold |
|
8,596 |
|
|
7,660 |
|
|
17,083 |
|
|
15,232 |
|
|||||
| Depreciation and amortization |
|
802 |
|
|
778 |
|
|
1,590 |
|
|
1,536 |
|
|||||
| Total operating costs |
|
73,200 |
|
|
65,343 |
|
|
146,399 |
|
|
128,800 |
|
|||||
| Earnings from operations |
|
7,132 |
|
|
5,978 |
|
|
14,082 |
|
|
12,717 |
|
|||||
| Interest expense |
|
(467 |
) |
|
(410 |
) |
|
(900 |
) |
|
(807 |
) |
|||||
| Earnings before income taxes |
|
6,665 |
|
|
5,568 |
|
|
13,182 |
|
|
11,910 |
|
|||||
| Provision for income taxes |
|
(1,466 |
) |
|
(1,196 |
) |
|
(2,835 |
) |
|
(2,560 |
) |
|||||
| Net earnings |
|
5,199 |
|
|
4,372 |
|
|
10,347 |
|
|
9,350 |
|
|||||
| Earnings attributable to noncontrolling interests |
|
(129 |
) |
|
(106 |
) |
|
(250 |
) |
|
(222 |
) |
|||||
| Net earnings attributable to UnitedHealth Group | |||||||||||||||||
| common shareholders |
$ |
5,070 |
|
$ |
4,266 |
|
$ |
10,097 |
|
$ |
9,128 |
|
|||||
| Diluted earnings per share attributable to | |||||||||||||||||
| UnitedHealth Group common shareholders |
$ |
5.34 |
|
$ |
4.46 |
|
$ |
10.61 |
|
$ |
9.55 |
|
|||||
| Adjusted earnings per share attributable to | |||||||||||||||||
| UnitedHealth Group common shareholders (a) |
$ |
5.57 |
|
$ |
4.70 |
|
$ |
11.06 |
|
$ |
10.02 |
|
|||||
| Diluted weighted-average common shares outstanding |
|
950 |
|
|
956 |
|
|
952 |
|
|
956 |
|
|||||
| (a) | See page 6 for a reconciliation of the non-GAAP measure |
| UNITEDHEALTH GROUP | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (in millions) | ||||||
| (unaudited) | ||||||
| June 30, | December 31, | |||||
|
2022 |
2021 |
|||||
| Assets | ||||||
| Cash and short-term investments |
$ |
27,964 |
$ |
23,907 |
||
| Accounts receivable, net |
|
18,718 |
|
14,216 |
||
| Other current assets |
|
21,674 |
|
23,635 |
||
| Total current assets |
|
68,356 |
|
61,758 |
||
| Long-term investments |
|
42,427 |
|
43,114 |
||
| Other long-term assets |
|
119,389 |
|
107,334 |
||
| Total assets |
$ |
230,172 |
$ |
212,206 |
||
| Liabilities, redeemable noncontrolling interests and equity | ||||||
| Medical costs payable |
$ |
28,978 |
$ |
24,483 |
||
| Short-term borrowings and current maturities of long-term debt |
|
5,592 |
|
3,620 |
||
| Other current liabilities |
|
54,128 |
|
50,189 |
||
| Total current liabilities |
|
88,698 |
|
78,292 |
||
| Long-term debt, less current maturities |
|
45,799 |
|
42,383 |
||
| Other long-term liabilities |
|
14,548 |
|
15,052 |
||
| Redeemable noncontrolling interests |
|
4,922 |
|
1,434 |
||
| Equity |
|
76,205 |
|
75,045 |
||
| Total liabilities, redeemable noncontrolling interests and equity |
$ |
230,172 |
$ |
212,206 |
||
| UNITEDHEALTH GROUP | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in millions) | |||||||
| (unaudited) | |||||||
| Six Months Ended June 30, |
|||||||
|
|
2022 |
|
|
2021 |
|
||
| Operating Activities | |||||||
| Net earnings |
$ |
10,347 |
|
$ |
9,350 |
|
|
| Noncash items: | |||||||
| Depreciation and amortization |
|
1,590 |
|
|
1,536 |
|
|
| Deferred income taxes and other |
|
200 |
|
|
113 |
|
|
| Share-based compensation |
|
504 |
|
|
426 |
|
|
| Net changes in operating assets and liabilities |
|
(451 |
) |
|
120 |
|
|
| Cash flows from operating activities |
|
12,190 |
|
|
11,545 |
|
|
| Investing Activities | |||||||
| Purchases of investments, net of sales and maturities |
|
(3,366 |
) |
|
(2,789 |
) |
|
| Purchases of property, equipment and capitalized software |
|
(1,212 |
) |
|
(1,130 |
) |
|
| Cash paid for acquisitions, net |
|
(7,150 |
) |
|
(4,642 |
) |
|
| Other, net |
|
(532 |
) |
|
(648 |
) |
|
| Cash flows used for investing activities |
|
(12,260 |
) |
|
(9,209 |
) |
|
| Financing Activities | |||||||
| Common share repurchases |
|
(5,000 |
) |
|
(2,900 |
) |
|
| Dividends paid |
|
(2,908 |
) |
|
(2,548 |
) |
|
| Net change in short-term borrowings and long-term debt |
|
6,162 |
|
|
4,858 |
|
|
| Other, net |
|
4,996 |
|
|
1,159 |
|
|
| Cash flows from financing activities |
|
3,250 |
|
|
569 |
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
57 |
|
|
6 |
|
|
| Increase in cash and cash equivalents |
|
3,237 |
|
|
2,911 |
|
|
| Cash and cash equivalents, beginning of period |
|
21,375 |
|
|
16,921 |
|
|
| Cash and cash equivalents, end of period |
$ |
24,612 |
|
$ |
19,832 |
|
|
| UNITEDHEALTH GROUP | ||||||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION – BUSINESSES | ||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
| Revenues | ||||||||||||||||
| UnitedHealthcare |
$ |
62,105 |
|
$ |
55,474 |
|
$ |
124,700 |
|
$ |
110,588 |
|
||||
| Optum |
|
45,082 |
|
|
38,303 |
|
|
88,341 |
|
|
74,687 |
|
||||
| Eliminations |
|
(26,855 |
) |
|
(22,456 |
) |
|
(52,560 |
) |
|
(43,758 |
) |
||||
| Total consolidated revenues |
$ |
80,332 |
|
$ |
71,321 |
|
$ |
160,481 |
|
$ |
141,517 |
|
||||
| Earnings from Operations | ||||||||||||||||
| UnitedHealthcare |
$ |
3,850 |
|
$ |
3,095 |
|
$ |
7,648 |
|
$ |
7,203 |
|
||||
| Optum (a) |
|
3,282 |
|
|
2,883 |
|
|
6,434 |
|
|
5,514 |
|
||||
| Total consolidated earnings from operations |
$ |
7,132 |
|
$ |
5,978 |
|
$ |
14,082 |
|
$ |
12,717 |
|
||||
| Operating Margin | ||||||||||||||||
| UnitedHealthcare |
|
6.2 |
% |
|
5.6 |
% |
|
6.1 |
% |
|
6.5 |
% |
||||
| Optum |
|
7.3 |
% |
|
7.5 |
% |
|
7.3 |
% |
|
7.4 |
% |
||||
| Consolidated operating margin |
|
8.9 |
% |
|
8.4 |
% |
|
8.8 |
% |
|
9.0 |
% |
||||
| Revenues | ||||||||||||||||
| UnitedHealthcare Employer & Individual – Domestic |
$ |
15,567 |
|
$ |
14,942 |
|
$ |
31,389 |
|
$ |
29,574 |
|
||||
| UnitedHealthcare Employer & Individual – Global |
|
2,247 |
|
|
2,118 |
|
|
4,380 |
|
|
4,153 |
|
||||
| UnitedHealthcare Employer & Individual – Total |
|
17,814 |
|
|
17,060 |
|
|
35,769 |
|
|
33,727 |
|
||||
| UnitedHealthcare Medicare & Retirement |
|
28,625 |
|
|
25,304 |
|
|
57,725 |
|
|
50,778 |
|
||||
| UnitedHealthcare Community & State |
|
15,666 |
|
|
13,110 |
|
|
31,206 |
|
|
26,083 |
|
||||
| Optum Health |
$ |
17,583 |
|
$ |
13,300 |
|
$ |
34,265 |
|
$ |
25,703 |
|
||||
| Optum Insight |
|
3,282 |
|
|
2,957 |
|
|
6,501 |
|
|
5,809 |
|
||||
| Optum Rx |
|
24,805 |
|
|
22,524 |
|
|
48,716 |
|
|
44,128 |
|
||||
| Optum eliminations |
|
(588 |
) |
|
(478 |
) |
|
(1,141 |
) |
|
(953 |
) |
||||
| (a) | Earnings from operations for Optum for the three and six months ended June 30, 2022 included $1,399 and $2,765 for Optum Health; $839 and $1,686 for Optum Insight; and $1,044 and $1,983 for Optum Rx, respectively. Earnings from operations for Optum for the three and six months ended June 30, 2021 included $1,128 and $2,090 for Optum Health; $762 and $1,541 for Optum Insight; and $993 and $1,883 for Optum Rx, respectively. | ||||||||
| UNITEDHEALTH GROUP | ||||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION – BUSINESS METRICS | ||||||||||||||
| UNITEDHEALTHCARE CUSTOMER PROFILE | ||||||||||||||
| (in thousands) | ||||||||||||||
| People Served | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||
| Commercial – Domestic: | ||||||||||||||
| Risk-based |
|
8,010 |
|
7,950 |
|
7,985 |
|
7,840 |
||||||
| Fee-based |
|
18,480 |
|
18,460 |
|
18,595 |
|
18,395 |
||||||
| Total Commercial – Domestic |
|
26,490 |
|
26,410 |
|
26,580 |
|
26,235 |
||||||
| Medicare Advantage |
|
6,945 |
|
6,890 |
|
6,490 |
|
6,385 |
||||||
| Medicaid |
|
7,990 |
|
7,810 |
|
7,655 |
|
7,130 |
||||||
| Medicare Supplement (Standardized) |
|
4,355 |
|
4,355 |
|
4,395 |
|
4,390 |
||||||
| Total Community and Senior |
|
19,290 |
|
19,055 |
|
18,540 |
|
17,905 |
||||||
| Total UnitedHealthcare – Domestic Medical |
|
45,780 |
|
45,465 |
|
45,120 |
|
44,140 |
||||||
| Commerical – Global |
|
5,465 |
|
5,500 |
|
5,510 |
|
5,485 |
||||||
| Total UnitedHealthcare – Medical |
|
51,245 |
|
50,965 |
|
50,630 |
|
49,625 |
||||||
| Supplemental Data | ||||||||||||||
| Medicare Part D stand-alone |
|
3,330 |
|
3,360 |
|
3,700 |
|
3,750 |
||||||
| OPTUM PERFORMANCE METRICS | ||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | |||||||||||
| Optum Health Consumers Served (in millions) |
|
101 |
|
100 |
|
100 |
|
99 |
||||||
| Optum Insight Contract Backlog (in billions) |
$ |
23.6 |
$ |
22.8 |
$ |
22.4 |
$ |
21.3 |
||||||
| Optum Rx Quarterly Adjusted Scripts (in millions) |
|
357 |
|
352 |
|
353 |
|
342 |
||||||
| Note: UnitedHealth Group served 149 million unique individuals across all businesses at June 30, 2022. |
| UNITEDHEALTH GROUP | ||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||||||||||
| (in millions, except per share data) | ||||||||||||||
| (unaudited) | ||||||||||||||
| ADJUSTED NET EARNINGS PER SHARE(a) | ||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
Projected Year Ended December 31, |
||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
2022 |
||
| GAAP net earnings attributable to UnitedHealth Group common shareholders |
$ |
5,070 |
|
$ |
4,266 |
|
$ |
10,097 |
|
$ |
9,128 |
|
$19,400 – $19,975 | |
| Intangible amortization |
|
292 |
|
|
305 |
|
|
573 |
|
|
599 |
|
~1,200 | |
| Tax effect of intangible amortization |
|
(72 |
) |
|
(75 |
) |
|
(141 |
) |
|
(146 |
) |
~(300) | |
| Adjusted net earnings attributable to UnitedHealth Group common shareholders |
$ |
5,290 |
|
$ |
4,496 |
|
$ |
10,529 |
|
$ |
9,581 |
|
$20,300 – $20,875 | |
| GAAP diluted earnings per share |
$ |
5.34 |
|
$ |
4.46 |
|
$ |
10.61 |
|
$ |
9.55 |
|
$20.45 – $20.95 | |
| Intangible amortization per share |
|
0.31 |
|
|
0.32 |
|
|
0.60 |
|
|
0.63 |
|
~1.25 | |
| Tax effect per share of intangible amortization |
|
(0.08 |
) |
|
(0.08 |
) |
|
(0.15 |
) |
|
(0.16 |
) |
~(0.30) | |
| Adjusted diluted earnings per share |
$ |
5.57 |
|
$ |
4.70 |
|
$ |
11.06 |
|
$ |
10.02 |
|
$21.40 – $21.90 | |
| (a) | Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Adjusted net earnings per share excludes from the relevant GAAP metric, as applicable, intangible amortization and other items, if any, that do not relate to the Company’s underlying business performance. Management believes that the use of adjusted net earnings per share provides investors and management useful information about the earnings impact of acquisition-related intangible asset amortization. As amortization fluctuates based on the size and timing of the Company’s acquisition activity, management believes this exclusion provides a more useful comparison of the Company’s underlying business performance and trends from period to period. While intangible assets contribute to the Company’s revenue generation, the intangible amortization is not directly related. Therefore, the related revenues are included in adjusted earnings per share. |
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