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UnitedHealth Group Reports Third Quarter 2023 Results

  • Revenues of $92.4 Billion Grew 14% Year-Over-Year
  • Earnings from Operations Grew 14%
  • Cash Flows from Operations were $6.9 Billion
  • Earnings were $6.24 Per Share, Adjusted Earnings $6.56 Per Share

UnitedHealth Group (NYSE: UNH) reported third quarter 2023 performance led by broad-based growth at Optum and UnitedHealthcare.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231013141462/en/

UnitedHealth Group corporate headquarters (Photo: Business Wire)

UnitedHealth Group corporate headquarters (Photo: Business Wire)

“As a result of our colleagues’ steadfast focus on helping people access and receive the care they need, we are well-positioned to help even more people and continue to generate strong, diversified growth in the coming years,” said Andrew Witty, chief executive officer of UnitedHealth Group.

Growth in the third quarter was driven by the continuing increase in the number of people served by Optum and UnitedHealthcare and the broadening scope of services offered. The company strengthened the range of its full year 2023 net earnings outlook to $23.60 to $23.75 per share and adjusted net earnings to $24.85 to $25.00 per share.

Quarterly Financial Performance

 

Three Months Ended

 

 

September 30,

2023

September 30,

2022

June 30,

2023

 

 

Revenues

$92.4 billion

$80.9 billion

$92.9 billion

Earnings from Operations

$ 8.5 billion

$ 7.5 billion

$ 8.1 billion

Net Margin

6.3%

6.5%

5.9%

  • UnitedHealth Group’s third quarter 2023 revenues grew 14% to $92.4 billion year-over-year, including double-digit growth at both Optum and UnitedHealthcare. Third quarter 2023 earnings from operations were $8.5 billion, an increase of 14%.
  • The third quarter 2023 medical care ratio of 82.3%, compared to 81.6% last year, driven by previously noted outpatient care, primarily serving seniors, and business mix. Days claims payable were 50.7, compared to 48.2 in the second quarter 2023 and 50.8 in the third quarter 2022. Favorable medical reserve development of $720 million compared to $480 million in the second quarter 2023 and $870 million in the year-ago third quarter.
  • The third quarter 2023 operating cost ratio of 15% increased from 14.4% last year as the company’s business mix continues to shift to services and due to investments to support growth, offset in part by productivity improvements.
  • Cash flows from operations for the third quarter 2023 were $6.9 billion or 1.1x net income. Nine-months to date, cash flows were $34.3 billion or 2.0x net income and adjusted for CMS payment timing were $22.4 billion or 1.3x net income. The company returned over $11.5 billion to shareholders through the first nine months of 2023 through dividends and share repurchases. Return on equity of 28% in the quarter reflected the company’s consistent, broad-based earnings 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

 

September 30,

2023

September 30,

2022

June 30,

2023

 

 

Revenues

$69.9 billion

$62.0 billion

$70.2 billion

Earnings from Operations

$ 4.6 billion

$ 3.8 billion

$ 4.4 billion

Operating Margin

6.6%

6.1%

6.2%

  • UnitedHealthcare third quarter revenues grew 13% to $69.9 billion, reflecting growth in the number of people served. Operating earnings were $4.6 billion compared to $3.8 billion last year.
  • Year-to-date, total people served by UnitedHealthcare with medical benefits has increased by 1.1 million, driven by growth in the company’s commercial and public sector businesses. The number of consumers served with commercial benefits has grown by nearly 700,000 in 2023, reflecting the company’s focus on innovative and affordable benefit plans. The number of people served by the company’s senior and community offerings grew by over 400,000 due to product designs tailored to meet the specific needs of seniors as well as people and their families with limited economic resources and who often are underserved.
  • The UnitedHealthcare team remains actively engaged with individuals impacted by the ongoing state-driven Medicaid eligibility redetermination process. The company’s comprehensive outreach efforts are helping families connect with the right resources to maintain affordable coverage.

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 and technology to yield clinical insights, Optum helps improve overall health system performance by optimizing care quality, reducing care costs and improving the consumer experience.

Quarterly Financial Performance

 

Three Months Ended

 

September 30,

2023

September 30,

2022

June 30,

2023

 

 

Revenues

$56.7 billion

$46.6 billion

$56.3 billion

 

Earnings from Operations

$ 3.9 billion

$ 3.7 billion

$ 3.7 billion

 

Operating Margin

6.9%

7.9%

6.6%

 

  • Optum third quarter revenues grew 22% to $56.7 billion. Operating earnings were $3.9 billion compared to $3.7 billion last year. The operating margin of 6.9% compares to 7.9% in the prior year, reflecting investments in services provided to patients and customers to support growth.
  • Optum Health revenue increased 29% over last year and revenue per consumer served increased 27%, driven by growth in patients served under value-based care arrangements and continued expansion of the types and levels of care provided. The operating results reflect previously noted higher care activity and continued investments to improve patient health outcomes and status.
  • Optum Insight revenue increased 35% compared to a year ago due to the addition of Change Healthcare and growth across its technology-enabled offerings, which serve health systems, care providers, health plans and life sciences organizations. Optum Insight continues to build and invest in advanced data capabilities to meet the rising needs of its customers. The revenue backlog increased by more than $7 billion to over $31 billion compared to last year.
  • Optum Rx revenue increased 14% in the third quarter due to growth in serving new clients, expanded relationships with existing clients and continued advancement in the comprehensive scope of pharmacy services offered, including specialty and community-based pharmacy offerings. Adjusted scripts grew to over 383 million compared to 359 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 UnitedHealth Group on LinkedIn.

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 on the Investor Relations page and at https://uhg.com/Replay through October 27, 2023. This earnings release and the Form 8-K dated October 13, 2023, 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: 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; 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; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; 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 our businesses providing pharmacy care services; competitive pressures, including our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; failure to achieve targeted operating cost productivity improvements; failure to develop and maintain satisfactory relationships with health care payers, physicians, hospitals and other service providers; the impact of potential changes in tax laws and regulations; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to complete, manage or integrate strategic transactions; risks associated with public health crises arising from large-scale medical emergencies, pandemics, natural disasters and other extreme events; failure to attract, develop, retain, and manage the succession of key employees and executives; our investment portfolio performance; impairment of our goodwill and intangible assets; failure to protect proprietary rights to our databases, software and related products; downgrades in our credit ratings; 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
Quarter Ended September 30, 2023
 
- 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 Measures

UNITEDHEALTH GROUP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 
Three Months Ended

September 30,
Nine Months Ended

September 30,

2023

 

2022

 

2023

 

2022

Revenues
Premiums

$

72,339

 

$

64,491

 

$

217,599

 

$

192,457

 

Products

 

10,354

 

 

9,190

 

 

31,272

 

 

28,026

 

Services

 

8,671

 

 

6,700

 

 

25,414

 

 

19,717

 

Investment and other income

 

997

 

 

513

 

 

2,910

 

 

1,175

 

 
Total revenues

 

92,361

 

 

80,894

 

 

277,195

 

 

241,375

 

 
Operating costs
Medical costs

 

59,550

 

 

52,635

 

 

179,663

 

 

157,251

 

Operating costs

 

13,855

 

 

11,663

 

 

41,289

 

 

34,773

 

Cost of products sold

 

9,423

 

 

8,306

 

 

28,576

 

 

25,389

 

Depreciation and amortization

 

1,007

 

 

828

 

 

2,998

 

 

2,418

 

 
Total operating costs

 

83,835

 

 

73,432

 

 

252,526

 

 

219,831

 

 
Earnings from operations

 

8,526

 

 

7,462

 

 

24,669

 

 

21,544

 

 
Interest expense

 

(834

)

 

(516

)

 

(2,416

)

 

(1,416

)

 
Earnings before income taxes

 

7,692

 

 

6,946

 

 

22,253

 

 

20,128

 

 
Provision for income taxes

 

(1,654

)

 

(1,562

)

 

(4,784

)

 

(4,397

)

 
Net earnings

 

6,038

 

 

5,384

 

 

17,469

 

 

15,731

 

 
Earnings attributable to noncontrolling interests

 

(197

)

 

(122

)

 

(543

)

 

(372

)

 
Net earnings attributable to UnitedHealth Group common shareholders

$

5,841

 

$

5,262

 

$

16,926

 

$

15,359

 

 
Diluted earnings per share attributable to
UnitedHealth Group common shareholders

$

6.24

 

$

5.55

 

$

18.01

 

$

16.15

 

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

$

6.56

 

$

5.79

 

$

18.95

 

$

16.85

 

 
Diluted weighted-average common shares outstanding

 

936

 

 

948

 

 

940

 

 

951

(a) See page 6 for a reconciliation of the non-GAAP measure
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
 
September 30, December 31,

2023

2022

Assets
Cash and short-term investments

$

44,097

$

27,911

Accounts receivable, net

 

20,673

 

17,681

Other current assets

 

27,135

 

23,477

 
Total current assets

 

91,905

 

69,069

 
Long-term investments

 

45,474

 

43,728

Other long-term assets

 

144,684

 

132,908

 
Total assets

$

282,063

$

245,705

 
 
Liabilities, redeemable noncontrolling interests and equity
Medical costs payable

$

32,792

$

29,056

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

 

5,290

 

3,110

Other current liabilities

 

76,097

 

57,071

 
Total current liabilities

 

114,179

 

89,237

 
Long-term debt, less current maturities

 

58,079

 

54,513

Other long-term liabilities

 

15,825

 

15,608

Redeemable noncontrolling interests

 

4,416

 

4,897

Equity

 

89,564

 

81,450

 
Total liabilities, redeemable noncontrolling interests and equity

$

282,063

$

245,705

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

September 30,

2023

2022

Operating Activities
Net earnings

$

17,469

 

$

15,731

 

Noncash items:
Depreciation and amortization

 

2,998

 

 

2,418

 

Deferred income taxes and other

 

(553

)

 

(590

)

Share-based compensation

 

851

 

 

675

 

Net changes in operating assets and liabilities

 

13,496

 

 

12,505

 

 
Cash flows from operating activities

 

34,261

 

 

30,739

 

 
Investing Activities
Purchases of investments, net of sales and maturities

 

(2,850

)

 

(4,067

)

Purchases of property, equipment and capitalized software

 

(2,427

)

 

(1,936

)

Cash paid for acquisitions, net

 

(8,389

)

 

(7,154

)

Other, net

 

(721

)

 

50

 

 
Cash flows used for investing activities

 

(14,387

)

 

(13,107

)

 
Financing Activities
Common share repurchases

 

(6,500

)

 

(6,000

)

Dividends paid

 

(5,023

)

 

(4,450

)

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

 

5,848

 

 

3,806

 

Other, net

 

1,302

 

 

6,478

 

 
Cash flows used for financing activities

 

(4,373

)

 

(166

)

 
Effect of exchange rate changes on cash and cash equivalents

 

49

 

 

4

 

 
Increase in cash and cash equivalents

 

15,550

 

 

17,470

 

 
Cash and cash equivalents, beginning of period

 

23,365

 

 

21,375

 

 
Cash and cash equivalents, end of period

$

38,915

 

$

38,845

 

UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES
(in millions, except percentages)
(unaudited)
 
Three Months Ended

September 30,
Nine Months Ended

September 30,

2023

2022

2023

2022

Revenues
UnitedHealthcare

$

69,853

 

$

61,995

 

$

210,552

 

$

186,695

 

Optum

 

56,737

 

 

46,559

 

 

167,140

 

 

134,900

 

Eliminations

 

(34,229

)

 

(27,660

)

 

(100,497

)

 

(80,220

)

 
Total consolidated revenues

$

92,361

 

$

80,894

 

$

277,195

 

$

241,375

 

 
Earnings from Operations
UnitedHealthcare

$

4,592

 

$

3,799

 

$

13,293

 

$

11,447

 

Optum (a)

 

3,934

 

 

3,663

 

 

11,376

 

 

10,097

 

 
Total consolidated earnings from operations

$

8,526

 

$

7,462

 

$

24,669

 

$

21,544

 

 
Operating Margin
UnitedHealthcare

 

6.6

%

 

6.1

%

 

6.3

%

 

6.1

%

Optum

 

6.9

%

 

7.9

%

 

6.8

%

 

7.5

%

Consolidated operating margin

 

9.2

%

 

9.2

%

 

8.9

%

 

8.9

%

 
 
Revenues
UnitedHealthcare Employer & Individual - Domestic

$

16,854

 

$

15,929

 

$

50,157

 

$

47,318

 

UnitedHealthcare Employer & Individual - Global

 

2,417

 

 

2,120

 

 

6,905

 

 

6,500

 

UnitedHealthcare Employer & Individual - Total

 

19,271

 

 

18,049

 

 

57,062

 

 

53,818

 

UnitedHealthcare Medicare & Retirement

 

32,022

 

 

27,895

 

 

97,468

 

 

85,620

 

UnitedHealthcare Community & State

 

18,560

 

 

16,051

 

 

56,022

 

 

47,257

 

 
Optum Health

$

23,864

 

$

18,463

 

$

70,785

 

$

52,728

 

Optum Insight

 

4,977

 

 

3,693

 

 

14,147

 

 

10,194

 

Optum Rx

 

28,857

 

 

25,203

 

 

84,921

 

 

73,919

 

Optum Eliminations

 

(961

)

 

(800

)

 

(2,713

)

 

(1,941

)

 

(a)

Earnings from operations for Optum for the three and nine months ended September 30, 2023 included $1,568 and $4,869 for Optum Health; $1,109 and $2,984 for Optum Insight; and $1,257 and $3,523 for Optum Rx,repectively. Earnings from operations for Optum for the three and nine months ended September 30, 2022 included $1,575 and $4,340 for Optum Health; $1,007 and $2,693 for Optum Insight; and $1,081 and $3,064 for Optum Rx, espectively.

UNITEDHEALTH GROUP
SUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS
 
 
UNITEDHEALTHCARE CUSTOMER PROFILE
(in thousands)
 
People Served September 30, 2023 June 30, 2023 December 31, 2022 September 30, 2022
 
Commercial - Domestic:
Risk-based

 

8,120

 

8,035

 

8,045

 

8,055

Fee-based

 

19,130

 

19,140

 

18,640

 

18,500

 
Total Commercial - Domestic

 

27,250

 

27,175

 

26,685

 

26,555

 
Medicare Advantage

 

7,645

 

7,590

 

7,105

 

7,035

Medicaid

 

8,065

 

8,355

 

8,170

 

8,005

Medicare Supplement (Standardized)

 

4,345

 

4,330

 

4,375

 

4,370

 
Total Community and Senior

 

20,055

 

20,275

 

19,650

 

19,410

Total UnitedHealthcare - Domestic Medical

 

47,305

 

47,450

 

46,335

 

45,965

 
Commerical - Global

 

5,475

 

5,385

 

5,360

 

5,360

 
Total UnitedHealthcare - Medical

 

52,780

 

52,835

 

51,695

 

51,325

 
 
Supplemental Data
 
Medicare Part D stand-alone

 

3,335

 

3,355

 

3,295

 

3,310

 
 
 
OPTUM PERFORMANCE METRICS
 
September 30, 2023 June 30, 2023 December 31, 2022 September 30, 2022
 
Optum Health Consumers Served (in millions)

 

103

 

103

 

102

 

101

Optum Insight Contract Backlog (in billions)

$

31.6

$

31.4

$

30.0

$

24.1

Optum Rx Quarterly Adjusted Scripts (in millions)

 

383

 

381

 

370

 

359

 
 
Note: UnitedHealth Group served 152 million unique individuals across all businesses at September 30, 2023.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
 
ADJUSTED NET EARNINGS PER SHARE(a)
 
Three Months Ended

September 30,
Nine Months Ended

September 30,
Projected

Year Ended

December 31,

2023

 

2022

 

2023

 

2022

 

2023

GAAP net earnings attributable to UnitedHealth Group common shareholders

$

5,841

 

$

5,262

 

$

16,926

 

$

15,359

 

$22,125 - $22,350
Intangible amortization

 

392

 

 

323

 

 

1,178

 

 

896

 

~1,565
Tax effect of intangible amortization

 

(96

)

 

(92

)

 

(292

)

 

(233

)

~(390)
Adjusted net earnings attributable to UnitedHealth Group common shareholders

$

6,137

 

$

5,493

 

$

17,812

 

$

16,022

 

$23,300 - $23,525
 
GAAP diluted earnings per share

$

6.24

 

$

5.55

 

$

18.01

 

$

16.15

 

$23.60 - $23.75
Intangible amortization per share

 

0.42

 

 

0.34

 

 

1.25

 

 

0.94

 

~1.65
Tax effect per share of intangible amortization

 

(0.10

)

 

(0.10

)

 

(0.31

)

 

(0.24

)

~(0.40)
Adjusted diluted earnings per share

$

6.56

 

$

5.79

 

$

18.95

 

$

16.85

 

$24.85 - $25.00
ADJUSTED CASH FLOWS FROM OPERATIONS(a)
Three Months Ended

September 30,
Nine Months Ended

September 30,

2023

 

2022

 

2023

 

2022

GAAP cash flows from operations

$

6,902

 

$

18,549

 

$

34,261

 

$

30,739

 

Add: July CMS premium payments received in June

 

11,808

 

 

-

 

 

-

 

 

-

 

Less: October CMS premium payments received in September

 

(11,857

)

 

(9,763

)

 

(11,857

)

 

(9,763

)

Adjusted cash flows from operations

$

6,853

 

$

8,786

 

$

22,404

 

$

20,976

 

(a)

Adjusted net earnings per share and adjusted cash flows from operations are non-GAAP financial measures. 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.



Management believes the use of adjusted cash flows from operations provides investors and management with useful information to compare our cash flows from operations for the current period to other periods, when the Company does not receive its monthly payment from the Centers for Medicare and Medicaid Services (CMS) in the applicable quarter. CMS generally remits their monthly payments on the first calendar day of the applicable month. However, if the first calendar day of the month falls on a weekend or a holiday, CMS has typically paid the Company on the last business day of the preceding calendar month. Adjusted cash flows from operating activities presents operating cash flows assuming all CMS payments were received on the first calendar day of the applicable month.

 

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