MINNEAPOLIS (April 21, 2011) - UnitedHealth Group (NYSE: UNH) today reported first quarter results, highlighted by accelerated revenue growth from both its UnitedHealthcare and Optum businesses. First quarter 2011 net earnings were $1.22 per share. Key performance metrics and costs were in line with or better than Company expectations.

Stephen J. Hemsley, president and chief executive officer of UnitedHealth Group, said, "Demand is increasing for greater connectivity, transparency and sustainable cost structures across the health system, as consumers, payers and care providers call for quality care at affordable prices. UnitedHealth Group is well-positioned for sustained growth as we address these expanding market needs with consistent performance, solid fundamental execution and practical innovation that helps customers achieve their goals."

The Company updated its full year financial outlook based on first quarter results and business trends, and now forecasts 2011 revenues approaching $101 billion, net earnings in the range of $3.95 to $4.05 per share and cash flows from operations in a range of $5.8 billion to $6.2 billion.

UnitedHealth Group's consolidated first quarter 2011 revenues of $25.4 billion increased $2.2 billion or 10 percent year-over-year. UnitedHealthcare revenues increased by 9 percent, led by a 21 percent yearover- year increase in the UnitedHealthcare Community & State business, while Optum's 20 percent revenue increase included revenue advances above 30 percent year-over-year from both OptumHealth and OptumInsight.

  • First quarter earnings from operations were $2.2 billion and net earnings were $1.35 billion or $1.22 per share, an increase of 18 percent from first quarter 2010 results.
  • The first quarter net margin of 5.3 percent increased 20 basis points from 5.1 percent in the first quarter of 2010.
  • First quarter 2011 cash flows from operations of $1.22 billion were up slightly from $1.20 billion in the first quarter of 2010 and were stronger than projected, considering customers had prepaid nearly $400 million more than expected in the fourth quarter of 2010.
  • There were nine days sales outstanding in accounts receivable at the end of the first quarter of 2011 compared to nine days at March 31, 2010. First quarter 2011 days claims payable decreased three days year-over-year to 46 days at March 31, 2011, due to continued acceleration in the claims receipt and processing cycles.
  • The first quarter 2011 medical care ratio of 81.4 percent was stable, increasing 10 basis points year-overyear. First quarter results reflect successful efforts in aligning consumer engagement with clinical care management and a continuation of a moderated level of overall health system use. Favorable prior year reserve development of $440 million in first quarter 2011 was comparable to $490 million in the first quarter of 2010 - both representing less than 1 percent of the previous year's medical costs.
  • The first quarter operating cost ratio of 14.2 percent increased only 10 basis points year-over-year despite the 17 percent growth in fee-based revenues, which carry disproportionately higher operating costs than risk-based products. The multi-year initiative to align, simplify and streamline the organization for the benefit of customers continues to produce quarterly gains in quality, efficiency, and overall performance.
  • The first quarter 2011 tax rate decreased 1 percentage point year-over-year to 36 percent. The higher 2010 tax provision included the cumulative implementation of changes that increased income taxes under the Affordable Care Act.
  • UnitedHealth Group's quarter-end debt to debt-plus-equity ratio was consistent with recent quarters at 30.5 percent, and annualized return on equity based on first quarter results of 21 percent increased from 20 percent in the first quarter of 2010.
  • UnitedHealth Group repurchased 15 million shares for $620 million through the first three months of 2011 and ended the quarter with more than $900 million in cash available for general corporate use.

UnitedHealthcare provides network-based health care benefits for a full spectrum of customers in the health benefits market. UnitedHealthcare serves employers ranging from sole proprietorships to large, multi-site and national employers, as well as students and individuals, delivers health and well-being benefits to Medicare beneficiaries and retirees, and manages health care benefit programs on behalf of state Medicaid and community programs and their participants.

First quarter 2011 UnitedHealthcare revenues of $23.9 billion increased $1.9 billion or 9 percent year-overyear.

Revenue growth was driven by an increase of 1.9 million people served in the past year, including more than 1.2 million in the first quarter of 2011. Participation increased in every product category in the past year, led by organic growth of nearly 1.1 million people using commercial benefit products.

  • Earnings from operations for UnitedHealthcare for the first quarter of 2011 increased year-over-year to $1.9 billion. The first quarter 2011 operating margin improved 30 basis points year-over-year due to the benefits of growth and continued cost management disciplines.

UnitedHealthcare Employer & Individual

  • The UnitedHealthcare Employer & Individual business grew to serve 790,000 more people in first quarter 2011. Growth was led by the increase of 725,000 people using fee-based products, while risk-based business grew by 65,000 people. For the trailing twelve months, fee-based offerings grew to serve 750,000 more people and riskbased business served an additional 330,000, bringing total organic growth to 1.08 million people over that time

frame. First quarter 2011 commercial revenues of $11.1 billion grew $786 million or 8 percent over first quarter 2010 results.

  • UnitedHealthcare's commercial medical care ratio, including risk-based specialty benefit products, decreased 40 basis points year-over-year to 78.6 percent, due to effective clinical management, favorable reserve development and moderated levels of overall health system use.

UnitedHealthcare Medicare & Retirement

  • First quarter Medicare & Retirement revenues of $9.4 billion grew $555 million or 6 percent year-over-year and included growth across the Medicare Advantage, Medicare Supplement and Part D prescription drug programs. The Medicare & Retirement business increased the number of people it serves by 490,000 in the past 12 months.

- In Medicare Advantage, the Company brought services to 160,000 more seniors in the past year, an 8 percent year-over-year increase, including a net increase of 95,000 seniors served in the first quarter.

- Growth in active Medicare Supplement products continued, with the number of seniors served increasing by 125,000 or 5 percent in the past 12 months, including 70,000 people in the first quarter of 2011.

- At March 31, 2011, 4.7 million seniors participated in the Company's stand-alone Part D prescription drug plans, an increase of 205,000 seniors served over the past 12 months and 215,000 in the first quarter of 2011.

UnitedHealthcare Community & State

  • First quarter Community & State revenues of $3.3 billion increased $566 million or 21 percent year-over-year.

During the past 12 months, the Company expanded its Medicaid services to 345,000 more participants, including 70,000 in the first quarter. In addition to the membership gains, expansion in more complex and comprehensive programs with greater service intensity has driven a higher revenue growth rate for UnitedHealthcare Community & State.

Optum is an information and technology-enabled health services business serving the broad health care marketplace, including care providers, employers and plan sponsors, life sciences companies and consumers. By helping connect and align health system participants and providing them actionable intelligence at the points of decision-making,

Optum helps improve overall health system performance: optimizing care quality, reducing costs and improving the consumer experience. Optum is organized based on core capabilities and markets under three segments: OptumHealth (health management and wellness, clinical services and financial services), OptumInsight (technology, intelligence, consulting and business outsourcing solutions), and OptumRx (pharmacy services). The breadth of this portfolio allows Optum to impact key activities that help enable sustainable health communities.

Total Optum revenues for the first quarter of 2011 of $6.8 billion increased $1.1 billion or 20 percent, driven by organic growth and contributions from recent acquisitions. All businesses increased revenues year-over-year.

  • Optum's earnings from operations of $322 million in first quarter 2011 were stable year-over-year. Growth in revenues was offset by an expected reduction in operating margins due to changes in business mix within Optum's businesses and investments for future growth.


  • OptumHealth first quarter 2011 revenues of $1.5 billion increased $405 million or 37 percent year-overyear.

The revenue increase was led by expansion in clinical services and strong consumer growth in population health management products sold to payers and plan sponsors, such as behavioral health management, wellness and health coaching services.

  • OptumHealth first quarter 2011 earnings from operations of $109 million decreased by $34 million yearover- year and the operating margin decreased by about 6 percentage points year-over-year to 7.2 percent.

The decreases in earnings from operations and operating margin were expected, and reflect the implementation of Mental Health Parity legislation, internal business realignments and related revisions to service arrangements and continued investments in new market development and growth.

  • OptumHealth Financial Services continues to experience strong growth in dedicated health banking services. At March 31, 2011, assets under management grew nearly 30 percent year-over-year to $1.3 billion and total bank assets reached $1.6 billion, while the number of consumer accounts increased 9 percent to 2.2 million. OptumHealth Financial Services grew the electronic transmission of medical payments over its connectivity network by 42 percent by volume and almost 30 percent by payment value to nearly $12 billion in the quarter. This system now connects with 625,000 care providers - OptumHealth

Financial Services achieved network connectivity growth of 18 percent year-over-year.

OptumInsight (formerly Ingenix)

  • OptumInsight first quarter 2011 revenues of $671 million increased $166 million or 33 percent year-overyear, driven by organic growth and contributions from recent acquisitions. First quarter sales bookings increased 15 percent year-over-year, driven by strength in compliance, consulting services for care providers and payers and business process outsourcing services.
  • The OptumInsight contract revenue backlog increased 55 percent year-over-year to $2.8 billion after adjusting for backlog pertaining to the announced divestiture of the i3-branded clinical trial services business, which is estimated to be completed during the second quarter of 2011. Strong demand for solutions that help health system participants improve connectivity, workflow and overall performance continues, further improving visibility on expected full year 2011 revenue growth.
  • OptumInsight's first quarter 2011 earnings from operations of $83 million increased 57 percent year-overyear.

The year-over-year first quarter operating margin improvement of 190 basis points to 12.4 percent reflects an increased level of higher margin product and solution sales and favorable first quarter operating costs. OptumInsight continues to invest in the development of capabilities to address health care industry needs in the areas of payer and provider clinical compliance, end to end revenue cycle management, connectivity and informatics in support of integrated care operating models, and overall health information technology adoption.

OptumRx (formerly Prescription Solutions)

  • OptumRx first quarter revenues of $4.6 billion grew 13 percent or $550 million year-over-year, driven by growth in people served and prescription volumes. At March 31, 2011, OptumRx served more than 13 million consumers, including 3.8 million through employers and independent plan sponsors.
  • OptumRx earnings from operations of $130 million were stable year-over-year. Investments in operating costs to support growth initiatives offset the earnings contribution from higher revenues. Growth in specialty pharmacy continues to be strong and the related earnings contribution is growing.
  • OptumRx continues to advance overall consumer value in its product offerings. OptumRx is positioned distinctively in the market, in part because of its strength in innovation. Examples include the Part D Pharmacy Saver program, which makes $2 per script generics available at select pharmacies and the Value Network, which focuses volume to a sub-network of 20,000 pharmacies to improve the cost profiles of pharmacy programs for employers or plan sponsors. Reflecting the focus on value and affordability, OptumRx first quarter 2011 generic dispensing rate improved 4 percentage points year-over-year to approximately 75 percent.