UnitedHealth Group Reports 2019 Results

Diversified strength in performance continued across UnitedHealth Group (NYSE: UNH) in the fourth quarter and full year 2019.

"The dedicated women and men of UnitedHealth Group work together each day to improve outcomes and the patient and physician experience, while making health care more affordable, enabling us to serve more people better, while positioning us for continued growth in 2020," said David S. Wichmann, chief executive officer of UnitedHealth Group.

The Company affirmed its recently issued full year earnings outlook for 2020, including net earnings of $15.45 to $15.75 per share and adjusted net earnings of $16.25 to $16.55 per share.

• UnitedHealth Group's full year 2019 revenues of $242.2 billion grew $15.9 billion or 7.0 percent year-over-year, reflecting balanced, broad-based revenue growth across the businesses.
• Full year 2019 earnings from operations grew $2.3 billion or 13.5 percent year-over-year to $19.7 billion, with both UnitedHealthcare and Optum contributing strongly.
• Full year adjusted net earnings grew 17.3 percent to $15.11 per share, with fourth quarter adjusted net earnings growing 18.9 percent to $3.90 per share.
• Cash flows from operations in 2019 of $18.5 billion, or 1.3 times net income, grew 17.5 percent year-over-year. Fourth quarter cash flows were stronger than anticipated, partly on timing factors.
• The full year 2019 medical care ratio of 82.5 percent increased from 81.6 percent in 2018, as the impact of the health insurance tax deferral was partially offset by improved medical cost-efficiency. Favorable medical reserve development was $270 million in the quarter, with $150 million related to 2019 and $120 million related to previous years. Year end days claims payable were 50.8 days compared to 49.3 days in the third quarter 2019 and 49.5 in the fourth quarter 2018.
• The full year 2019 operating cost ratio of 14.5 percent declined from 15.1 percent in 2018, as the health insurance tax deferral and operating efficiencies were partially offset by business mix changes and investments in service, innovation and growth.
• Return on equity of 25.7 percent in 2019 reflected the Company's strong overall operating performance and efficient capital structure. The debt to total capital ratio was 40.2 percent at December 31, 2019, full year dividend payments grew 18.4 percent year-over-year to $3.9 billion, and the Company repurchased 22.4 million shares for $5.5 billion in 2019.

UnitedHealthcare provides health care benefits, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to improving the value health care 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.

• UnitedHealthcare full year revenues of $193.8 billion increased by $10.4 billion, or 5.6 percent, primarily due to growth in people served in Medicare Advantage and commercial benefits. Full year earnings from operations grew $1.2 billion or 13.3 percent to $10.3 billion. Fourth quarter 2019 earnings from operations increased $278 million year-over-year, with positive contributions coming from each of the benefits businesses.
  • UnitedHealthcare Employer & Individual full year 2019 revenues of $56.9 billion increased $2.2 billion year-over-year, as UnitedHealthcare served 845,000 more people with commercial benefits, including growth in both commercial risk and fee based products.
  • UnitedHealthcare Medicare & Retirement revenues grew by $7.8 billion or 10.3 percent to $83.3 billion in 2019, as the business grew to serve 5.3 million people in Medicare Advantage at year end, an increase of 325,000 in 2019. Medicare Advantage growth was diversified, reflecting strong performance in both the individual and group retiree markets.
  • UnitedHealthcare Community & State 2019 revenues grew modestly year-over-year to $43.8 billion as growth in serving more people with complex conditions was nearly offset by proactive market withdrawals, as well as states balancing carriers and managing eligibility.
  • UnitedHealthcare Global revenues for full year 2019 were stable year-over-year at $9.9 billion.

Optum is a health services business serving the broad health care marketplace, including payers, care providers, health systems, 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 and physician experience.

• Optum 2019 full year revenues grew by $11.7 billion or 11.5 percent year-over-year to $113.0 billion, with notably strong growth in OptumHealth. Full year earnings from operations advanced $1.1 billion or 13.7 percent year-over-year to $9.4 billion, driven by strong revenue growth and 20 basis points of operating margin expansion to 8.3 percent. Each Optum business had double-digit operating earnings growth for the full year.
  • OptumHealth full year revenues of $30.3 billion in 2019 expanded $6.2 billion or 25.6 percent year-over-year. OptumHealth served approximately 96 million people at year end 2019 and revenue per consumer served increased 26 percent year-over-year in the quarter, driven by growth in value-based care arrangements.
  • OptumInsight revenues grew 11.1 percent to $10.0 billion in 2019, reflecting continued growth and expansion in managed services, which contributed strongly to OptumInsight's contract backlog growth of 13.5 percent or $2.3 billion year-over-year to $19.3 billion.
  • OptumRx revenues advanced $4.8 billion in 2019 or 6.8 percent year-over-year to $74.3 billion reflecting a growing mix of diversified pharmacy care services. OptumRx fulfilled 1.34 billion adjusted scripts in 2019, consistent with 2018 despite the effects of a previously announced large client transition.

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 Investors page of the Company's website (www.unitedhealthgroup.com). Following the call, a webcast replay will be available on the same site through January 29, 2020. The conference call replay can also be accessed by dialing 1-800-839-1192. This earnings release and the Form 8-K dated January 15, 2020, can also be accessed from the Investors 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: 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; 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; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; 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.

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