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Share Name | Share Symbol | Market | Type |
---|---|---|---|
UnitedHealth Group Inc | NYSE:UNH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.22 | 0.25% | 493.67 | 494.87 | 491.86 | 492.48 | 142,979 | 14:54:22 |
UnitedHealth Group (NYSE: UNH) reported fourth quarter and full year 2017 results reflecting continued broad-based growth and strengthened operating performance across the enterprise. “We enter 2018 with both growth momentum and opportunity, as a result of our focus on improving the experience of those we serve, combined with actions taken to deepen our capabilities and presence in strategic markets,” said David S. Wichmann, chief executive officer of UnitedHealth Group.
As a result of The Tax Cuts and Jobs Act of 2017, UnitedHealth Group’s 2017 net earnings of $10.72 per share included a $1.22 per share non-cash benefit from the revaluation of the Company’s net deferred tax liability. This one-time item affects the comparability of results between periods, and accordingly has been excluded from adjusted net earnings per share.
The Company revised its 2018 financial outlook to reflect the effects of the U.S. corporate tax law changes, dedicating a significant portion of the benefits to accelerating investments in data analytics, technology and innovations to better serve consumers and care systems and to advancing new and existing business platforms. UnitedHealth Group now expects 2018 net earnings of $11.65 to $11.95 per share and adjusted net earnings of $12.30 to $12.60 per share. Cash flows from operations are expected to range from $15 billion to $15.5 billion.
Quarterly and Annual Financial PerformanceThree Months Ended
Year Ended
December 31,2017
December 31,2016
September 30,2017
December 31,2017
December 31,2016
Revenues $52.1 billion $47.5 billion $50.3 billion $201.2 billion $184.8 billion Earnings From Operations $4.0 billion $3.2 billion $4.1 billion $15.2 billion $12.9 billionNet Margin
6.9% 3.5% 4.9% 5.2%3.8%
Net Margin Adjusted for Tax Reform1
4.6%
4.7%
1 The Tax Cuts and Jobs Act of 2017 resulted in a $1.2 billion favorable non-cash revaluation of UnitedHealth Group’s U.S. net deferred tax liability, reducing the 2017 full year tax rate by 860 basis points to 22.8 percent and the fourth quarter tax rate by 32.7 percentage points to -1.4 percent and impacting the Company’s GAAP net margin.
UnitedHealthcare provides global health care benefits, serving individuals and employers, and Medicare and Medicaid beneficiaries.
Quarterly and Annual Financial PerformanceThree Months Ended
Year Ended
December 31,2017
December 31,2016
September 30,2017
December 31,2017
December 31,2016
Revenues $41.6 billion $37.9 billion $40.7 billion $163.3 billion $148.6 billion Earnings From Operations $1.8 billion $1.4 billion $2.4 billion $8.5 billion $7.3 billion Operating Margin 4.2% 3.7% 5.9% 5.2%4.9%
Optum is a health services business serving the global health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using market-leading information, data analytics, technology and clinical insights, Optum’s people help improve overall health system performance: optimizing care quality, reducing health care costs and improving the consumer experience and health system performance.
Quarterly and Annual Financial Performance
Three Months Ended
Year Ended
December 31,2017
December 31,2016
September 30,2017
December 31,2017
December 31,2016
Total Revenues $24.4 billion $22.2 billion $22.9 billion $91.2 billion $83.6 billion Earnings From Operations $2.2 billion $1.8 billion $1.7 billion $6.7 billion $5.6 billion Operating Margin 9.1% 8.1% 7.4% 7.4% 6.7%About UnitedHealth Group
UnitedHealth Group (NYSE: UNH) is a diversified health and well-being 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 30, 2018. The conference call replay can also be accessed by dialing 1-800-839-3613. This earnings release and the Form 8-K dated January 16, 2018 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 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,” “outlook,” “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 actual results to differ materially from results discussed or implied in 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; new laws or regulations, or changes in existing laws or regulations, or their enforcement or application, including 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 outcome of the Department of Justice’s legal actions relating to risk adjustment submission matters; our ability to maintain and achieve improvement in CMS star ratings and other quality scores that impact revenue; reductions in revenue or delays to cash flows received under Medicare, Medicaid and other government programs, including the effects of a prolonged U.S. government shutdown or debt ceiling constraints; changes in Medicare, including changes in payment methodology, the CMS star ratings program or the application of risk adjustment data validation audits; cyberattacks or other privacy or data security incidents; failure to comply with privacy and data security regulations; regulatory and other risks and uncertainties of the pharmacy benefits management industry; competitive pressures, which could affect our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; our ability to execute contracts on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity improvements, including savings resulting from technology enhancement and administrative modernization; increases in costs and other liabilities associated with increased litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of acquisitions and other strategic transactions; fluctuations in foreign currency exchange rates on our reported shareholders’ equity and results of operations; downgrades in our credit ratings; the performance of our investment portfolio; impairment of the value of our goodwill and intangible assets if estimated future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; 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 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.
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 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 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 applicable securities laws.
UNITEDHEALTH GROUP Earnings Release Schedules and Supplementary InformationYear Ended December 31, 2017 - Condensed Consolidated Statements of Operations - Condensed Consolidated Balance Sheets - Condensed Consolidated Statements of Cash Flows - Supplemental Financial Information - Businesses - Supplemental Financial Information - Business Metrics - 2018 Outlook Revised for the Impact of Tax Reform - Reconciliation of Non-GAAP Financial Measures UNITEDHEALTH GROUPCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in millions, except per share data)(unaudited) Three Months EndedDecember 31,
Years EndedDecember 31,
2017 2016 2017 2016 Revenues Premiums $ 40,378 $ 36,752 $ 158,453 $ 144,118 Products 7,157 6,959 26,366 26,658 Services 4,228 3,563 15,317 13,236 Investment and other income 298 261 1,023 828 Total revenues 52,061 47,535 201,159 184,840 Operating costs Medical costs 33,207 29,696 130,036 117,038 Operating costs 7,820 7,817 29,557 28,401 Cost of products sold 6,479 6,308 24,112 24,416 Depreciation and amortization 578 527 2,245 2,055 Total operating costs 48,084 44,348 185,950 171,910 Earnings from operations 3,977 3,187 15,209 12,930 Interest expense (308 ) (268 ) (1,186 ) (1,067 ) Earnings before income taxes 3,669 2,919 14,023 11,863 Benefit (provision) for income taxes 52 (1,211 ) (3,200 ) (4,790 ) Net earnings 3,721 1,708 10,823 7,073 Earnings attributable to noncontrolling interests (104 ) (24 ) (265 ) (56 )Net earnings attributable to UnitedHealth Group common shareholders
$ 3,617 $ 1,684 $ 10,558 $ 7,017Diluted earnings per share attributable to UnitedHealth Group common shareholders
$ 3.65 $ 1.74 $ 10.72 $ 7.25Adjusted earnings per share attributable to UnitedHealth Group common shareholders (a)
$ 2.59 $ 2.11 $ 10.07 $ 8.05 Diluted weighted-average common shares outstanding 991 970 985 968 (a) See page 7 for a reconciliation of the non-GAAP measure UNITEDHEALTH GROUPCONDENSED CONSOLIDATED BALANCE SHEETS(in millions)(unaudited) December 31,2017 December 31,2016 Assets Cash and short-term investments $ 15,490 $ 13,275 Accounts receivable, net 9,568 8,152 Other current assets 12,026 12,452 Total current assets 37,084 33,879 Long-term investments 28,341 23,868 Other long-term assets 73,632 65,063 Total assets $ 139,057 $ 122,810 Liabilities, redeemable noncontrolling interests and equity Medical costs payable $ 17,871 $ 16,391 Commercial paper and current maturities of long-term debt 2,857 7,193 Other current liabilities 29,735 25,668 Total current liabilities 50,463 49,252 Long-term debt, less current maturities 28,835 25,777 Other long-term liabilities 7,737 7,592 Redeemable noncontrolling interests 2,189 2,012 Equity 49,833 38,177 Total liabilities, redeemable noncontrolling interests and equity $ 139,057 $ 122,810 UNITEDHEALTH GROUPCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited) Years EndedDecember 31,
2017 2016 Operating Activities Net earnings $ 10,823 $ 7,073 Noncash items: Depreciation and amortization 2,245 2,055 Deferred income taxes and other (748 ) (1 ) Share-based compensation 597 485 Net changes in operating assets and liabilities 679 183 Cash flows from operating activities 13,596 9,795 Investing Activities Purchases of investments, net of sales and maturities (4,319 ) (5,927 ) Purchases of property, equipment and capitalized software (2,023 ) (1,705 ) Cash paid for acquisitions, net (2,131 ) (1,760 ) Other, net (126 ) 37 Cash flows used for investing activities (8,599 ) (9,355 ) Financing Activities Common share repurchases (1,500 ) (1,280 ) Dividends paid (2,773 ) (2,261 ) Net change in commercial paper and long-term debt (2,615 ) 990 Other, net 3,447 1,540 Cash flows used for financing activities (3,441 ) (1,011 ) Effect of exchange rate changes on cash and cash equivalents (5 ) 78 Increase (decrease) in cash and cash equivalents 1,551 (493 ) Cash and cash equivalents, beginning of period 10,430 10,923 Cash and cash equivalents, end of period $ 11,981 $ 10,430 Supplemental Schedule of Noncash Investing Activities: Common stock issued for acquisition $ 2,164 $ - UNITEDHEALTH GROUPSUPPLEMENTAL FINANCIAL INFORMATION - BUSINESSES(in millions, except percentages)(unaudited) Three Months EndedDecember 31,
Years EndedDecember 31,
2017 2016 2017 2016 Revenues UnitedHealthcare $ 41,599 $ 37,948 $ 163,257 $ 148,581 Optum 24,392 22,167 91,185 83,593 Eliminations (13,930 ) (12,580 ) (53,283 ) (47,334 ) Total consolidated revenues $ 52,061 $ 47,535 $ 201,159 $ 184,840 Earnings from Operations UnitedHealthcare $ 1,762 $ 1,398 $ 8,498 $ 7,307 Optum (a) 2,215 1,789 6,711 5,623 Total consolidated earnings from operations $ 3,977 $ 3,187 $ 15,209 $ 12,930 Operating Margin UnitedHealthcare 4.2 % 3.7 % 5.2 % 4.9 % Optum 9.1 % 8.1 % 7.4 % 6.7 % Consolidated operating margin 7.6 % 6.7 % 7.6 % 7.0 % Revenues UnitedHealthcare Employer & Individual $ 13,307 $ 13,504 $ 52,066 $ 53,084 UnitedHealthcare Medicare & Retirement 16,390 14,043 65,995 56,329 UnitedHealthcare Community & State 9,938 8,642 37,443 32,945 UnitedHealthcare Global 1,964 1,759 7,753 6,223 OptumHealth $ 5,463 $ 4,513 $ 20,570 $ 16,908 OptumInsight 2,247 2,079 8,087 7,333 OptumRx 17,015 15,857 63,755 60,440 Optum eliminations (333 ) (282 ) (1,227 ) (1,088 ) (a) Earnings from operations for Optum for the three months and year ended December 31, 2017 included $556 and $1,823 for OptumHealth; $690 and $1,770 for OptumInsight; and $969 and $3,118 for OptumRx, respectively. Earnings from operations for Optum for the three months and year ended December 31, 2016 included $420 and $1,428 for OptumHealth; $563 and $1,513 for OptumInsight; and $806 and $2,682 for OptumRx, respectively. UNITEDHEALTH GROUPSUPPLEMENTAL FINANCIAL INFORMATION - BUSINESS METRICS UNITEDHEALTHCARE CUSTOMER PROFILE(in thousands) People Served December 31,2017
September 30,2017
December 31,2016
Commercial group: Risk-based 7,935 7,805 7,470 Fee-based 18,595 18,610 18,900 Total commercial group 26,530 26,415 26,370 Individual 485 515 1,350 Fee-based TRICARE 2,850 2,855 2,860 - - - Total Commercial 29,865 29,785 30,580 Medicare Advantage 4,430 4,390 3,630 Medicaid 6,705 6,375 5,890 Medicare Supplement (Standardized) 4,445 4,415 4,265 Total Public and Senior 15,580 15,180 13,785 Total UnitedHealthcare - Domestic Medical 45,445 44,965 44,365 International 4,080 4,080 4,220 Total UnitedHealthcare - Medical 49,525 49,045 48,585 Supplemental Data Medicare Part D stand-alone 4,940 4,945 4,930 OPTUM PERFORMANCE METRICS December 31,2017
September 30,2017
December 31,2016
OptumHealth Consumers Served (in millions) 91 90 83 OptumInsight Contract Backlog (in billions) $ 15.0 $ 13.9 $ 12.6 OptumRx Quarterly Adjusted Scripts (in millions) 333 321 318 Note: UnitedHealth Group served 139 million unique individuals across all businesses at December 31, 2017. UNITEDHEALTH GROUP2018 OUTLOOK REVISED FOR THE IMPACT OF TAX REFORM(in millions, except per share data and percentages) Business Revenue RangesEarnings from
Operations
Operating Margin
Range
UnitedHealthcare $179,000 – $181,000 $9,100 – $9,500 5.0% – 5.3% Optum 99,000 – 100,000 $7,600 – $7,800 7.6% – 7.9% Eliminations (55,000) – (56,000) Range of $223,000 - $225,000 $16,700 – $17,300 7.4% – 7.8% Consolidated UnitedHealth Group 2018 Targets UnitedHealth Group Medical Care Ratio 81.5% ± 50 bps Operating Cost Ratio 15.3% ± 30 bps Depreciation and Amortization $2,350 – $2,400 EBITDA (a) $19,050 – $19,700 Investment and Other Income $1,000 – $1,050 Interest Expense $1,200 – $1,250 Tax Rate ~24% Net Earnings Attributable to UnitedHealth Group Shareholders $11,475 – $11,775 Net Margin 5.1% – 5.3% Diluted Weighted-Average Shares 982 – 987 Diluted Net Earnings Per Common Share to UnitedHealth Group Shareholders $11.65 – $11.95 Adjusted Earnings Per Common Share (a) $12.30 – $12.60 Cash Flows from Operations $15,000 – $15,500 Dividends Paid (at current rate) ~$2,900 Share Repurchase $3,000 – $4,000 Capital Expenditures ~$2,000(a) See page 7 for a reconciliation of the non-GAAP measures
UNITEDHEALTH GROUP Reconciliation of Non-GAAP Financial Measures - Adjusted Net Earnings per Share - Net Margin Adjusted for Tax Reform - Adjusted Cash Flows from Operations - EBITDA Use of Non-GAAP Financial MeasuresAdjusted net earnings per share, adjusted cash flows from operations, net margin adjusted for tax reform and EBITDA 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. In addition, adjusted net earnings per share excludes the earnings impact of the deferred tax revaluation recognized after The Tax Cuts and Jobs Act of 2017 was enacted in December 2017 and the recognition of the Company's estimated share of guaranty association assessments resulting from the liquidation of Penn Treaty Network America Insurance Company and its subsidiary (Penn Treaty). Management believes the exclusion of these items provides a more useful comparison of the Company's underlying business performance from period to period.
Management believes that 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 that of 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. As such, quarterly operating cash flows determined in accordance with GAAP may occasionally include CMS premium payments for two months or four months. 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.
Management believes that the use of net margin adjusted for tax reform provides investors and management useful information about the performance of the underlying business prior to the impact of the deferred tax revaluation recognized in 2017.
Management believes that the use of EBITDA provides investors and management useful information about our operating earnings before interest, taxes, depreciation and amortization.
UNITEDHEALTH GROUPRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(in millions, except per share data)(unaudited) ADJUSTED NET EARNINGS PER SHARE Three Months EndedDecember 31,
Years EndedDecember 31,
ProjectedYear Ended
December 31,
2017 2016 2017 2016 2018GAAP net earnings attributable to UnitedHealth Group common shareholders
$ 3,617 $ 1,684 $ 10,558 $ 7,017 $11,475 to $11,775 Tax reform impact (1,197 ) - (1,197 ) - - Penn Treaty impact - 350 - 350 - Intangible amortization 227 222 896 882 ~835 Tax effect (85 ) (213 ) (334 ) (454 ) ~(210)Adjusted net earnings attributable to UnitedHealth Group common shareholders
$ 2,562 $ 2,043 $ 9,923 $ 7,795 $12,100 to $12,400 GAAP diluted earnings per share $ 3.65 $ 1.74 $ 10.72 $ 7.25 $11.65 to $11.95 Tax reform impact per share (1.21 ) - (1.22 ) - - Penn Treaty impact per share - 0.36 - 0.36 - Intangible amortization per share 0.23 0.23 0.91 0.91 ~0.85 Tax effect per share (0.08 ) (0.22 ) (0.34 ) (0.47 ) ~(0.20) Adjusted diluted earnings per share $ 2.59 $ 2.11 $ 10.07 $ 8.05 ~$12.30 to $12.60 NET MARGIN ADJUSTED FOR TAX REFORMThree Months
Ended
December 31,
Year EndedDecember 31,
2017 2017 GAAP net earnings attributable to UnitedHealth Group common shareholders $ 3,617 $ 10,558 Tax reform impact (1,197 ) (1,197 )Net earnings adjusted for tax reform attributable to UnitedHealth Group Common shareholders
$ 2,420 $ 9,361 GAAP net margin 6.9 % 5.2 % Net margin adjusted for tax reform 4.6 % 4.7 % UNITEDHEALTH GROUPRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(in millions)(unaudited) ADJUSTED CASH FLOWS FROM OPERATIONS Three Months EndedDecember 31,
2017 2016 GAAP cash flows from operations $ (2,577 ) $ (1,409 ) Add: October CMS premium payments received in September 4,568 3,777 Adjusted cash flows from operations $ 1,991 $ 2,368 EBITDA Projected Year EndedDecember 31, 2018
GAAP net earnings $11,800 to $12,200 Provision for income taxes 3,700 – 3,850 Interest expense 1,200 – 1,250 Depreciation and amortization 2,350 – 2,400 EBITDA $19,050 to $19,700Click here to subscribe to Mobile Alerts for UnitedHealth Group.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180116005747/en/
UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice PresidentorJohn S. Penshorn, 952-936-7214Senior Vice PresidentorMedia:Tyler Mason, 424-333-6122Vice President
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