UnitedHealth Group Provides 2015 Earnings Update, Initial 2016 View
November 19 2015 - 5:50AM
Business Wire
- Revises 2015 EPS Outlook to
Approximately $6.00 Per Share
- Expects $425 Million or $0.26 Per
Share Reduction in Fourth Quarter 2015 Earnings Driven by 2015 and
2016 Individual Exchange Product Pressure
- Projects Earnings of $7.10 to $7.30
Per Share in 2016
UnitedHealth Group (NYSE:UNH) today reported revised
expectations for 2015, reflecting a continuing deterioration in
individual exchange-compliant product performance, and provided an
initial outlook for 2016.
“In recent weeks, growth expectations for individual exchange
participation have tempered industrywide, co-operatives have
failed, and market data has signaled higher risks and more
difficulties while our own claims experience has deteriorated, so
we are taking this proactive step,” said Stephen J. Hemsley, chief
executive officer of UnitedHealth Group. “We continue to be pleased
with the growth and overall performance of our Company outside of
the individual exchange products and look forward to strong,
positive and broad based earnings growth across our enterprise in
2016.”
The Company’s revised 2015 net earnings outlook of approximately
$6.00 per share reflects expected pre-tax earnings pressure of $425
million or $0.26 per share, including $275 million related to the
advance recognition of 2016 losses. The earnings pressure is driven
by projected losses on individual exchange-compliant products
related to the 2015 and 2016 policy years.
The remainder of the business continues to perform in line with
expectations. The Company noted strong growth momentum and
performance in all other benefit market segments and distinguished
performance in its services businesses.
UnitedHealth Group expects net earnings of $7.10 to $7.30 per
share in 2016 and will provide more detail on its outlook at its
Investor Conference on December 1, 2015.
UnitedHealthcare has pulled back on its marketing efforts for
individual exchange products in 2016. The Company is evaluating the
viability of the insurance exchange product segment and will
determine during the first half of 2016 to what extent it can
continue to serve the public exchange markets in 2017.
UnitedHealthcare remains a strong supporter of sustainable efforts
to ensure access to affordable, quality care for all Americans, and
has advocated publicly for this for more than 20 years, including
as one of the first businesses to focus on serving people through
managed Medicaid and Medicare.
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.
Conference Call
The company will hold a brief teleconference for investors and
analysts to discuss today’s announcement at 9:00 a.m. Eastern Time.
To participate, dial 877-876-9175 (United States) or 785-424-1668
(International). When an operator answers, simply provide them with
the conference ID, which is UNH1119. 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
December 19, 2015. The conference call replay can also be accessed
by dialing 1-800-839-3115. This release and the Form 8-K dated
November 19, 2015 may also be accessed from the Investors page of
the Company’s website.
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,” “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; assessments for insolvent payers under state guaranty
fund laws; our ability to 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
TRICARE programs, including sequestration and 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; our participation in federal and state health
insurance exchanges which entail uncertainties associated with mix
and volume of business; cyber-attacks 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; 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, including our
acquisition of Catamaran; fluctuations in foreign currency exchange
rates on our reported shareholders equity and results of
operations; downgrades in our credit ratings; adverse economic
conditions, including decreases in enrollment resulting from
increases in the unemployment rate and commercial attrition; the
performance of our investment portfolio; 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 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.
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UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice
PresidentorJohn S. Penshorn, 952-936-7214Senior Vice
PresidentorMedia:Don Nathan, 952-936-1885Senior Vice
PresidentorTyler Mason, 424-333-6122Vice President
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