[January 20, 2021]













Fundamental execution was strong across UnitedHealth Group (NYSE: UNH) in the fourth quarter and throughout the full year 2020, led by Optum and by UnitedHealthcare’s community and senior benefit businesses, even as the Company delivered expansive voluntary relief efforts for consumers, care providers and customers across the health system.


“I couldn’t be prouder of the more than 325,000 women and men of this enterprise for their role in advancing a higher performing health system during these times of unprecedented challenges,” said David S. Wichmann, chief executive officer of UnitedHealth Group. “We are grateful for the human spirit and resolve of our people, including our 125,000 clinicians who, with other frontline health care workers, demonstrated extraordinary collaboration, compassion and innovation.”


The full year and fourth quarter results reflect continued strong performance, impacted by COVID-19 care costs, continued voluntary consumer and customer assistance initiatives and other pandemic-related factors. As expected, fourth quarter net earnings of $2.30 per share and adjusted earnings of $2.52 per share declined as care patterns normalized, while COVID-19 costs rose, and further rebate effects were recognized. The 2020 results were consistent with the outlook provided by the Company at its December 1st, 2020 Investor Conference.


The Company affirmed its recently issued full year earnings outlook for 2021, including net earnings of $16.90 to $17.40 per share and adjusted net earnings of $17.75 to $18.25 per share. As previously discussed, this outlook includes approximately $1.80 per share in potential net unfavorable impact to accommodate continuing COVID-19 effects, such as: testing and treatment costs; the residual impact of people deferring care in 2020; and unemployment and other economy-driven factors.













Quarterly and Annual Financial Performance


 


 


Three Months Ended


Year Ended


 


December 31,

2020


December 31,

2019


September 30,

2020


December 31,

2020


December 31,

2019

 


Revenues


$65.5 billion


$60.9 billion


$65.1 billion


$257.1 billion


$242.2 billion


Earnings from Operations


$3.5 billion


$5.1 billion


$4.7 billion


$22.4 billion


$19.7 billion


Net Margin


3.4%


5.8%


4.9%


6.0%


5.7%


  • UnitedHealth Group’s full year 2020 revenues of $257.1 billion grew $15.0 billion or 6.2% year-over-year, reflecting broad-based revenue growth across the businesses.


  • Full year 2020 earnings from operations grew $2.7 billion or 13.8% year-over-year to $22.4 billion, with both UnitedHealthcare and Optum contributing to the expansion.


  • The full year 2020 medical care ratio of 79.1% declined from 82.5% in 2019 primarily impacted by the return of the health insurance tax and disrupted care patterns earlier in the year, offset by the Company’s COVID-19 assistance measures and testing and treatment costs. Favorable medical reserve development was $850 million in the quarter, with $770 million related to 2020. Year-end days claims payable were 47.8 days compared to 46.8 days in the third quarter 2020 and 50.8 days at year end 2019, with the year-over-year comparison impacted by timing factors, including the Company’s voluntary acceleration of payments to assist care providers.


  • The full year 2020 operating cost ratio of 16.2% increased from 14.5% in 2019 as continued operating efficiency gains were offset by the return of the health insurance tax, COVID-19 response efforts, business mix and increased investments in service, innovation and growth.


  • Cash flows from operations in 2020 of $22.2 billion, or 1.4 times net income, grew 20.1% year-over-year. Fourth quarter cash flows were stronger than anticipated, partly on timing factors.


  • Return on equity of 24.9% in 2020 reflected the Company’s strong overall operating performance 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 consumers receive by reducing the total cost of care, enhancing the quality of care received, improving health and wellness and simplifying the health care experience.










Quarterly and Annual Financial Performance



Three Months Ended


Year Ended


 


December 31,

2020


December 31,

2019


September 30,

2020


December 31,

2020


December 31,

2019

 


Revenues


$50.3 billion


$48.2 billion


$50.4 billion


$200.9 billion


$193.8 billion


Earnings from Operations


$396 million


$2.1 billion


$2.1 billion


$12.4 billion


$10.3 billion


Operating Margin


0.8%


4.3%


4.1%


6.2%


5.3%


  • UnitedHealthcare full year revenues of $200.9 billion compare to $193.8 billion last year, as growth in serving community and senior programs was partially offset by commercial enrollment declines. UnitedHealthcare community and senior program revenues grew by 8.0% in 2020, with an additional 1.2 million people served in Medicaid and Medicare Advantage, while commercial revenue growth was impacted by pandemic-related economic factors.


  • Full year operating earnings were $12.4 billion compared to $10.3 billion last year, with the care pattern disruption which occurred in the second quarter offset by the Company’s efforts to help people obtain needed care, increased COVID-19 testing and care costs and rebate and customer assistance effects.


  • Fourth quarter operating results reflect restoration of care patterns, the Company’s continued efforts to provide support and relief efforts to correct economic imbalances caused by the pandemic and additional reserves for rebates and related activity as calendar year assessments were concluded.


  • UnitedHealthcare growth highlights for 2021 include: serving an expected up to 1.5 million more people in total, with growth in Individual and Group Medicare Advantage and Dual Special Needs Plans approaching 900,000 people; Medicaid growth with new market entries in Kentucky, Indiana, and North Carolina along with a strong proposal pipeline for both existing and new states; commercial market and specialty expansion, with newly introduced consumer-centric offerings, such as physician-led plans, expected to grow again at a strong-double digit pace.


Optum is a health services business serving the global health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using market-leading information, data analytics, technology and clinical insights, Optum helps improve overall health system performance: optimizing care quality, reducing health care costs and improving the consumer experience.










Quarterly and Annual Financial Performance



Three Months Ended


Year Ended


 


December 31,

2020


December 31,

2019


September 30,

2020


December 31,

2020


December 31,

2019

 


Revenues


$35.9 billion


$29.8 billion


$34.9 billion


$136.3 billion


$113.0 billion


Earnings from Operations


$3.1 billion


$3.0 billion


$2.6 billion


$10.0 billion


$9.4 billion


Operating Margin


8.7%


10.1%


7.4%


7.4%


8.3%


  • Optum full year revenues of $136.3 billion compare to $113.0 billion last year and full year operating earnings of $10.0 billion compare to $9.4 billion last year.


  • OptumHealth served 98 million people at year end, compared to 96 million a year ago and revenue per consumer served increased 29% year-over-year for full year 2020 and in the fourth quarter, driven by further expansion of people served in value-based care arrangements and the increasing acuity of the care services provided.


  • OptumInsight’s revenue backlog increased by nearly $1.0 billion in 2020 to $20.2 billion, driven by growth in managed services. OptumInsight and Change Healthcare (NASDAQ: CHNG) recently announced they would combine. The combination will more effectively connect and simplify core clinical, administrative and payment processes, resulting in better health outcomes and experiences for everyone, at lower cost.


  • During 2020 OptumRx continued to build its growing pharmacy care services offerings, including community-based behavioral pharmacies, e-commerce services, home infusion services and specialty pharmacy. Script volume in the established pharmacy benefits management business began to approach more normal levels in the fourth quarter, rising 6 million from the third quarter and 15 million from the second quarter to 331 million.


  • Optum growth expectations for 2021 include: continued expansion of value-based care arrangements, strong growth serving seniors at Optum Care through clinic-based and in-home services and expansion of ambulatory care surgery service lines; OptumRx’s ongoing expansion of multi-dose packaging, alternate site infusion services and retail pharmacy dispensing; growth in OptumInsight’s pipeline for comprehensive managed services, including revenue management, information technology, payment integrity and data analytics.


About UnitedHealth Group


UnitedHealth Group (NYSE: UNH) is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone. UnitedHealth Group offers a broad spectrum of products and services through two distinct platforms: UnitedHealthcare, which provides health care coverage and benefits services; and Optum, which provides information and technology-enabled health services. For more information, visit UnitedHealth Group at www.unitedhealthgroup.com or 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 February 3, 2021. The conference call replay can also be accessed by dialing 1-855-859-2056, Conference ID: 5181037. This earnings release and the Form 8-K dated January 20, 2021 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.


Forward-Looking Statements


The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements which are intended to take advantage of the “safe harbor” provisions of the federal securities law. The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. Actual results could differ materially from those that management expects, depending on the outcome of certain factors including: risks associated with public health crises, large-scale medical emergencies and pandemics, such as the COVID-19 pandemic; our ability to effectively estimate, price for and manage medical costs; new or changes in existing health care laws or regulations, or their enforcement or application; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; reductions in revenue or delays to cash flows received under government programs; changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; cyberattacks, other privacy/data security incidents, or our failure to comply with related regulations; risks and uncertainties associated with the pharmacy benefits management industry; competitive pressures; changes in or challenges to our public sector contract awards; our ability to contract on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity improvements; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to manage successfully


our strategic alliances or complete or receive anticipated benefits of strategic transactions; fluctuations in foreign currency exchange rates; downgrades in our credit ratings; our investment portfolio performance; impairment of our goodwill and intangible assets; and our ability to obtain sufficient funds from our regulated subsidiaries or from external financings to fund our obligations, maintain our debt to total capital ratio at targeted levels, maintain our quarterly dividend payment cycle, or continue repurchasing shares of our common stock. This above list is not exhaustive. We discuss these matters, and certain risks that may affect our business operations, financial condition and results of operations more fully in our filings with the SEC, including our reports on Forms 10-K, 10-Q and 8-K. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.












UNITEDHEALTH GROUP
Earnings Release Schedules and Supplementary Information
Year Ended December 31, 2020
 


– 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
December 31,

Year Ended
December 31,


2020


2019


2020


2019

Revenues


Premiums


$50,581


$47,625


$201,478


$189,699

Products


8,690


7,626


34,145


31,597

Services


5,751


5,217


20,016


18,973

Investment and other income


445


433


1,502


1,886

Total revenues


65,467


60,901


257,141


242,155

Operating costs


Medical costs


42,082


39,276


159,396


156,440

Operating costs


11,514


9,301


41,704


35,193

Cost of products sold


7,622


6,511


30,745


28,117

Depreciation and amortization


732


718


2,891


2,720

Total operating costs


61,950


55,806


234,736


222,470

Earnings from operations


3,517


5,095


22,405


19,685

Interest expense


(401)


(437)


(1,663)


(1,704)

Earnings before income taxes


3,116


4,658


20,742


17,981

Provision for income taxes


(764)


(990)


(4,973)


(3,742)

Net earnings


2,352


3,668


15,769


14,239

Earnings attributable to noncontrolling interests


(140)


(127)


(366)


(400)

Net earnings attributable to UnitedHealth Group common shareholders


$2,212


$3,541


$15,403


$13,839

Diluted earnings per share attributable to UnitedHealth Group common shareholders


$2.30


$3.68


$16.03


$14.33

Adjusted earnings per share attributable to UnitedHealth Group common shareholders (a)


$2.52


$3.90


$16.88


$15.11

Diluted weighted-average common shares outstanding


961


962


961


966



(a)

See page 6 for a reconciliation of the non-GAAP measure


























UNITEDHEALTH GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)

 

 

  December 31,

December 31,

 


2020


2019

Assets

 


Cash and short-term investments  


$19,781


$14,245

Accounts receivable, net  


12,870


11,822

Other current assets  


21,067


16,567

Total current assets  


53,718


42,634

Long-term investments  


41,242


37,209

Other long-term assets  


102,329


94,046

Total assets  


$197,289


$173,889

Liabilities, redeemable noncontrolling interests and equity  


Medical costs payable  


$21,872


$21,690

Short-term borrowings and current maturities of long-term debt  


4,819


3,870

Other current liabilities  


45,729


36,222

Total current liabilities  


$72,420


$61,782

Long-term debt, less current maturities  


38,648


36,808

Other long-term liabilities  


15,682


13,137

Redeemable noncontrolling interests  


2,211


1,726

Equity

 


68,328


60,436

Total liabilities, redeemable noncontrolling interests and equity  


$197,289


$173,889





























UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

 

 

  Year Ended
December 31,

 


2020


2019

Operating Activities  


Net earnings  


$15,769


$14,239

Noncash items:  


Depreciation and amortization  


2,891


2,720

Deferred income taxes and other  


(60)


124

Share-based compensation  


679


697

Net changes in operating assets and liabilities  


2,895


683

Cash flows from operating activities  


22,174


18,463

Investing Activities  


Purchases of investments, net of sales and maturities  


(2,836)


(2,504)

Purchases of property, equipment and capitalized software  


(2,051)


(2,071)

Cash paid for acquisitions, net  


(7,139)


(8,343)

Other, net

 


(506)


219

Cash flows used for investing activities  


(12,532)


(12,699)

Financing Activities  


Common share repurchases  


(4,250)


(5,500)

Dividends paid  


(4,584)


(3,932)

Net change in short-term borrowings and long-term debt  


2,586


3,994

Other, net

 


2,658


(187)

Cash flows used for financing activities  


(3,590)


(5,625)

Effect of exchange rate changes on cash and cash equivalents  


(116)


(20)

Increase in cash and cash equivalents  


5,936


119

Cash and cash equivalents, beginning of period  


10,985


10,866

Cash and cash equivalents, end of period  


$16,921


$10,985




























SUPPLEMENTAL FINANCIAL INFORMATION – BUSINESSES
(in millions, except percentages)
(unaudited)

 

 

  Three Months Ended
December 31,

Year Ended
Decemeber 31,

 


2020


2019


2020


2019

Revenues  


UnitedHealthcare  


$50,327


$48,247


$200,875


$193,842

Optum  


35,851


29,798


136,308


112,950

Eliminations  


(20,711)


(17,144)


(80,042)


(64,637)

Total consolidated revenues  


$65,467


$60,901


$257,141


$242,155

Earnings from Operations  


UnitedHealthcare  


$396


$2,075


$12,359


$10,326

Optum (a)  


3,121


3,020


10,046


9,359

Total consolidated earnings from operations  


$3,517


$5,095


$22,405


$19,685

Operating Margin  


UnitedHealthcare  


0.8%


4.3%


6.2%


5.3%

Optum  


8.7%


10.1%


7.4%


8.3%

Consolidated operating margin  


5.4%


8.4%


8.7%


8.1%

 

 
Revenues  


UnitedHealthcare Employer & Individual  


$14,548


$14,538


$55,872


$56,945

UnitedHealthcare Medicare & Retirement  


22,151


20,603


90,764


83,252

UnitedHealthcare Community & State  


11,691


10,752


46,487


43,790

UnitedHealthcare Global  


1,937


2,354


7,752


9,855

 

 
OptumHealth  


$10,978


$8,323


$39,808


$30,317

OptumInsight  


2,909


2,861


10,802


10,006

OptumRx  


22,489


19,094


87,498


74,288

Optum eliminations  


(525)


(480)


(1,800)


(1,661)



(a) Earnings from operations for Optum for the three months and year ended December 31, 2020 included $1,046 and $3,434 for OptumHealth; $843 and $2,725 for OptumInsight; and $1,232 and $3,887 for OptumRx, respectively. Earnings from operations for Optum for the three months and year ended December 31, 2019 included $901 and $2,963 for OptumHealth; $905 and $2,494 for OptumInsight; and $1,214 and $3,902 for OptumRx, respectively.

















UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION – BUSINESS METRICS

 
UNITEDHEALTHCARE CUSTOMER PROFILE
(in thousands)

 
People Served

December 31, 2020

September 30, 2020

December 31, 2019
Commercial:


Risk-based


7,910


7,950


8,575


Fee-based


18,310


18,400


19,185


Total Commercial


26,220


26,350


27,760


Medicare Advantage


5,710


5,670


5,270


Medicaid


6,620


6,435


5,900


Medicare Supplement (Standardized)


4,460


4,450


4,500


Total Public and Senior


16,790


16,555


15,670


Total UnitedHealthcare – Domestic Medical


43,010


42,905


43,430


Global


5,425


5,285


5,720


Total UnitedHealthcare – Medical


48,435


48,190


49,150


 
Supplemental Data


 
Medicare Part D stand-alone


4,045


4,075


4,405


 
OPTUM PERFORMANCE METRICS

 

December 31, 2020

September 30, 2020

December 31, 2019

 
OptumHealth Consumers Served (in millions)


98


98


96


OptumInsight Contract Backlog (in billions)


$20.2


$19.9


$19.3


OptumRx Quarterly Adjusted Scripts (in millions)


331


325


333


 

 
Note: UnitedHealth Group served 142 million unique individuals across all businesses at December 31, 2020.




















UNITEDHEALTH GROUP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

(in millions, except per share data)

(unaudited)

 

ADJUSTED NET EARNINGS PER SHARE(a)

 

Three Months Ended
December 31,

Year Ended
December 31,

Projected
Year Ended
December 31,


2020


2019


2020


2019


2021

GAAP net earnings attributable to UnitedHealth Group common shareholders


$2,212


$3,541


$15,403


$13,839

$16,050 – $16,600
Intangible amortization


279


275


1,080


1,004

~1,100
Tax effect of intangible amortization


(68)


(68)


(262)


(248)

~(275)

Adjusted net earnings attributable to UnitedHealth Group common shareholders


$2,423


$3,748


$16,221


$14,595

$16,875 – $17,425

 
GAAP diluted earnings per share


$2.30


$3.68


$16.03


$14.33

$16.90 – $17.40
Intangible amortization per share


0.29


0.29


1.12


1.04

~1.15
Tax effect per share of intangible amortization


(0.07)


(0.07)


(0.27)


(0.26)

~(0.30)

Adjusted diluted earnings per share


$2.52


$3.90


$16.88


$15.11

$17.75 – $18.25



(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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