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UnitedHealth Group Reports Second Quarter 2022 Results

UNH | July 15, 2022

Revenues of $80.3 Billion Grew 13% Year-Over-Year, with Double-Digit Growth at both Optum and UnitedHealthcare

Earnings from Operations were $7.1 Billion, Growth of 19% Year-Over-Year

Cash Flows from Operations were $6.9 Billion, 1.3x Net Income

Earnings were $5.34 Per Share, Adjusted Earnings $5.57 Per Share

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.