UnitedHealth Group Reports First Quarter Results
UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice PresidentJohn Penshorn, 952-936-7214Senior Vice PresidentorMedia:Don Nathan, 952-936-1885Senior Vice PresidentTyler Mason, 714-299-5730Vice President
UnitedHealth Group (NYSE: UNH) today reported first quarter results, highlighted by strong enrollment growth in each of UnitedHealthcare’s benefits businesses combined with well-diversified revenue growth and broad-based margin expansion at Optum. First quarter 2013 net earnings were $1.16 per common share. Overall results, led by Optum’s performance, were strong across the enterprise, with year-over-year reimbursement and seasonal margin pressure in UnitedHealthcare’s Medicare Advantage and Part D prescription drug plan product lines, as expected. Two of this year’s early highlights have been UnitedHealthcare’s implementation of the new TRICARE military health care award beginning April 1 and the successful movement of the first 3 million new and migrating UnitedHealthcare commercial consumers to pharmacy benefit manager OptumRx.
Stephen J. Hemsley, president and chief executive officer of UnitedHealth Group, said, “This quarter provided a solid start to 2013 across our diversified health care businesses. UnitedHealthcare is achieving market-leading growth in health benefits, now including Amil and TRICARE, and is positioned to achieve one of its strongest-ever growth years. Looking forward, innovation and continuing discipline in advancing consistent care quality and medical and operating cost management will be critical to fulfilling the market’s demands for greater health care value, as the pressures of reform and chronic under-reimbursement continue in federal programs serving seniors and individuals and families with lower incomes. At the same time, Optum is seeing accelerating growth and momentum as payers, care providers and other benefit sponsors respond to market pressures for lower costs, higher quality, greater transparency and increased productivity across our national health care system.”
The first quarter revenue growth rate of 11 percent included the conversion of one very large public sector customer from risk-based to fee-based benefits. This conversion was not in the Company’s previous 2013 revenue outlook of $123 billion to $124 billion and will reduce annual revenues by $2.5 billion. The conversion was partially offset by higher-than-expected overall business growth, and UnitedHealth Group now forecasts 2013 revenues will approximate $122 billion, an increase of 10 percent over 2012 results. Although the April 1 sequestration cuts were not included in previous projections, the Company continues to forecast 2013 net earnings in the range of $5.25 to $5.50 per common share, recognizing sequestration pressures the top end of that range.
Adjusted numbers are non-GAAP financial measures. GAAP cash flows from operations of $3.6 billion for the first quarter of 2012 included a $2.5 billion monthly premium payment from the Centers for Medicare and Medicaid Services (CMS) that was received early. Cash flows from operations have been adjusted to report CMS payments in the quarter to which they relate.
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 and international organizations, as well as students and individuals; delivers health and well-being benefits to Medicare beneficiaries and retirees; manages health care benefit programs on behalf of state Medicaid and community programs and their participants and serves the nation’s active and retired military and their families through the TRICARE program.
Optum is a health services business serving the broad health care marketplace, including payers, care providers, employers, government, life sciences companies and consumers. Using advanced data, analytics and technology, Optum helps improve overall health system performance: optimizing care quality, reducing costs and improving the consumer experience and care provider performance.
UnitedHealth Group (NYSE: UNH) is a diversified health and well-being company dedicated to helping people live healthier lives and making health care work better. With headquarters in Minnetonka, Minn., 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. Through its businesses, UnitedHealth Group serves more than 85 million people worldwide. For more information, visit UnitedHealth Group at .
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 (). The webcast replay of the call will be available on the same site through May 2, 2013, following the live call. The conference call replay can also be accessed by dialing 1-800-839-2492. This earnings release and the Form 8-K dated April 18, 2013 may also be accessed from the Investors page of the Company’s website.
The statements, estimates, projections, guidance or outlook contained in this press release include “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “plan,” “project,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors. Some factors that could cause results to differ materially from the forward-looking statements include: our ability to effectively estimate, price for and manage our medical costs, including the impact of any new coverage requirements; the potential impact that new laws or regulations, or changes in existing laws or regulations, or their enforcement or application could have on our results of operations, financial position and cash flows, including as a result of increases in medical, administrative, technology or other costs or decreases in enrollment resulting from U.S., Brazilian and other jurisdictions' regulations affecting the health care industry; the impact of any potential assessments for insolvent payers under state guaranty fund laws; the ultimate impact of the Patient Protection and Affordable Care Act, which could materially and adversely affect our results of operations, financial position and cash flows through reduced revenues, increased costs, new taxes and expanded liability, or require changes to the ways in which we conduct business or put us at risk for loss of business; potential reductions in revenue received from Medicare and Medicaid programs, including sequestration; uncertainties regarding changes in Medicare, including potential changes in risk adjustment data validation audit and payment adjustment methodology; failure to comply with patient privacy and data security regulations; regulatory and other risks and uncertainties associated with the pharmacy benefits management industry and our ability to successfully repatriate our pharmacy benefits management business; competitive pressures, which could affect our ability to maintain or increase our market share; the impact of challenges to our public sector contract awards; our ability to execute contracts on competitive terms with physicians, hospitals and other service professionals; increases in costs and other liabilities associated with increased litigation, government investigations, audits or reviews; failure to complete or receive anticipated benefits of acquisitions and other strategic transactions, including the Amil acquisition; our ability to attract, retain and provide support to a network of independent producers (i.e., brokers and agents) and consultants; events that may adversely affect our relationship with AARP; the potential impact of adverse economic conditions on our revenues (including decreases in enrollment resulting from increases in the unemployment rate and commercial attrition) and results of operations; the performance of our investment portfolio; possible impairment of the value of our goodwill and intangible assets in connection with dispositions or if estimated future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; increases in health care costs resulting from large-scale medical emergencies; failure to maintain effective and efficient information systems or if our technology products otherwise do not operate as intended; misappropriation of our proprietary technology; our ability to obtain sufficient funds from our regulated subsidiaries or the debt or capital markets to fund our obligations, to maintain our debt to total capital ratio at targeted levels, to maintain our quarterly dividend payment cycle or to continue repurchasing shares of our common stock; the impact of fluctuations in foreign currency exchange rates on our reported shareholders' equity and results of operations; potential downgrades in our credit ratings; and failure to achieve targeted operating cost productivity improvements, including savings resulting from technology enhancement and administrative modernization.
This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our other periodic and current filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any or all forward-looking statements we make may turn out to be wrong, and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. 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 future results may vary materially from expectations expressed in this press release 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.